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Center for American Progress

Nearly 9 Million Americans Claim the Medical Expense Deduction

Nearly 9 Million Americans Claim the Medical Expense Deduction

Data by Congressional District

The House majority has proposed eliminating a tax deduction used by millions of Americans.

A lymphoma patient receives cellular immunotherapy in Seattle, May 2017. (AP/Elaine Thompson)
A lymphoma patient receives cellular immunotherapy in Seattle, May 2017. (AP/Elaine Thompson)

Republicans in the U.S. House of Representatives are expected to vote next week on a tax plan that would provide massive tax cuts to corporations and the wealthiest Americans. By 2027, approximately 47 percent of the plan’s total tax cuts would go to the richest 1 percent of Americans. But while the average person in the richest 0.1 percent would pay nearly $280,000 less in taxes in 2027, many middle-class families would pay more than they currently do that same year. Some families would experience tax hikes even sooner, as the plan would eliminate a tax provision that allows families to deduct high medical expenses from their incomes. For context, in 2014, 8.8 million Americans deducted this medical expense, including 6.3 million Americans earning less than $75,000. The average deduction that year was $9,958.

As such, Americans with high medical expenses would be especially hurt by the House majority’s tax plan. Under current law, taxpayers can deduct medical expenses that exceed 10 percent of their family’s adjusted gross income (AGI). This provides a major tax break for families facing an unexpected large medical expense, such as paying for surgery out-of-network as part of cancer treatment, as well as families who face steep medical expenses every year due to the high costs of care for chronic conditions and disabilities. Despite the need for this deduction, it is eliminated under the House majority plan. As Center for American Progress analysis shows, millions of lower- and middle-income families across the United States used this deduction in tax year 2014, the most recent year for which data by congressional district is available from the IRS National Taxpayer Advocate service. Note that for tax year 2014, taxpayers older than the age of 65 were able to deduct medical expenses that amounted to more than 7.5 percent of their AGI, while younger filers could deduct expenses that were more 10 percent of their AGI. Under current law for tax year 2016 and future years, filers older than 65 can deduct medical expenses that are more than 10 percent of their AGI.

The medical expense deduction is based on the principle that taxes should be based on the ability to pay. Without the deduction, many Americans already struggling with the cost of care for themselves or their loved ones would face an additional challenge at tax time. Eliminating this deduction in order to fund tax cuts for the most well-off is wrong.

To download CAP’s tables by congressional district, click here.

Andrew Schwartz is a policy analyst for Economic Policy at the Center for American Progress. Alex Rowell is a research associate for Economic Policy at the Center.

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Andrew Schwartz

Senior Policy Analyst

Alex Rowell

Policy Analyst