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Defraying High Out-of-Pocket Health Care Costs: The Medical Expense Tax Deduction

The medical expense tax deduction helps millions of middle-income taxpayers of all ages confront high out-of-pocket health care costs. The changes from the Tax Cuts and Jobs Act of 2017 expired at the end of 2018, making the deduction less generous. Unless policymakers maintain continuity, taxpayers would not be able to deduct as much in 2019 as they did in 2018.

Nationally, the extension would cost the budget an estimated $1.2 billion in 2019. About 34 percent of this benefit would go to middle-income taxpayers. On average, taxpayers who claim the deduction would reduce their income taxes by $380 in 2019. Taxpayers ages 65 and over would receive an average tax benefit of $480. As the fact sheet shows, the estimated impact varies state by state.