Lower Threshold for Deductibility of Medical Expenses

As a matter of public policy, to ease the burden of high medical expenses, our tax code allows a tax […]

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As a matter of public policy, to ease the burden of high medical expenses, our tax code allows a tax deduction (for those who itemize deductions) on medical expenses over a certain percentage of one’s adjusted gross income. In the past, medical expenses over 2 percent of your income could be deducted on income taxes. A change in tax law during the 80s caused increases in the threshold so that now one can only deduct expenses over 7.5 percent of your income. This is a terrific burden for people who incur even moderate medical expenses.

Medical expenses can devastate people who don’t earn much. High-income taxpayers are significantly impacted as well in that they must pay an ever-higher medical cost before they meet the 7.5 percent threshold for deductibility.

Being able to deduct such expenses provides some relief for those unfortunate enough to have them in the first place. But at a 7.5 percent threshold, one has to spend an awful lot before they see any relief.

Congress should reduce the 7.5 percent threshold, or eliminate it altogether, so medical expenses can be deducted to the greatest extent possible. Lowering or eliminating the expense threshold should appeal to both major parties. It would be popular with all taxpayers and voters. Low-income families who get little relief now would benefit greatly.

No new expenditure of tax dollars is required and only a minimal amount of tax revenue is lost. It would be very easyto implement immediately and would benefit the American taxpayer almost as soon.

It would be good public policy to lower or eliminate this high threshold for deductibility of medical expenses and make it available to all taxpayers, not just those who itemize deductions. This would provide help to the lowest income taxpayers who have never had such relief before.

Now as Congress seeks ways to increase consumer spending, provide tax relief, and stimulate the economy is the time to push for this change in tax law that would benefit everyone who has medical expenses.

Please e-mail, fax, write, or talk to your representatives in Washington, and ask others to do so as well. We can all benefit if such a change is made.

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Mental Wellness