The Tax Cuts and Jobs Act changes the threshold for the amount of medical expenses allowed as an itemized deduction based on a percentage of AGI.

Prior Law

Through December 31, 2017

Generally, the threshold to claim medical expenses as an itemized deduction was 10% of AGI. For tax years 2013-2016, a 7.5%-of-AGI floor for medical expenses was applied if a taxpayer or taxpayer’s spouse had reached age 65 before the close of the tax year. For the 2017 tax year the Tax Cuts and Jobs Act retroactively extends the 7.5%-of-AGI floor for all taxpayers, regardless of age.

New Law

Effective for tax years beginning after December 31, 2017, and before January 1, 2026

For tax year 2018 only, the Tax Cuts and Jobs Act allows the 7.5%-of-AGI floor for all taxpayers, regardless of age. For tax years beginning after 2018, medical expenses will be subject to the 10% floor.

Commentary

This provision allows for potential of additional medical expense deductions in both 2017 and 2018 for some taxpayers, given the lower AGI floor. However, with the increased standard deduction in 2018, it is likely that fewer individuals will itemize deductions, which includes allowed medical expenses.

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Curt Bach
I joined Hawkins Ash CPAs in August 2010, and am currently a manager in the firm’s Medford office. I provide a variety of tax services, including trust and estate tax preparation and planning. I have more than nine years of experience providing audit and tax services to nonprofit organizations, governmental entities and small businesses. I am a member of our firm’s tax committee and not-for-profit service group.

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