If you're age 65 or older and enrolled in Medicare, chances are you're paying premiums for various types of coverage and possibly incurring other significant out-of-pocket health care costs. The good news? Some or all of these expenses may be tax-deductible.

With a little planning and recordkeeping, you may be able to reduce your tax liability by claiming a deduction for medical expenses, including Medicare premiums. Here's what you need to know.

Deducting Medical Expenses: What Counts?
When preparing your tax return, you're allowed to combine your Medicare premiums with other qualifying medical expenses to determine whether you can take a deduction. Eligible costs include:

• Medicare Part A, B, and D premiums
• Premiums for Medicare Advantage (Part C) and Medigap policies
• Out-of-pocket expenses for dental treatments, eye exams, lab tests, hearing aids, long-term care services, and prescription medications
• Transportation costs to and from medical appointments, including mileage (deductible at 21 cents per mile in 2025 or based on actual expenses for gas, oil, and maintenance)

Many of the expenses Medicare doesn't cover can still offer tax-saving potential if properly documented.

Is Itemizing Required?
Yes, for most taxpayers, the deduction for medical expenses is only available if you itemize deductions on Schedule A of Form 1040. In addition, your total medical expenses must exceed 7.5% of your adjusted gross income (AGI) to qualify.

For 2025, the standard deduction amounts are:

• $15,000 for single filers
• $30,000 for married couples filing jointly
• $22,500 for heads of household

If your total itemized deductions (which include medical expenses, state and local taxes, mortgage interest, and charitable contributions) don't exceed these amounts, the medical expense deduction may not provide a benefit.

Note: Under the One Big Beautiful Bill, which became law on July 4, the standard deduction amounts will increase for 2025 through 2028 by:

• $1,000 for single filers
• $2,000 for married joint filers
• $1,500 for heads of household

This adjustment may make it more difficult for some taxpayers to benefit from itemizing, but for those with higher medical expenses, opportunities still exist.

A Valuable Exception: Self-Employed Individuals and S Corporation Shareholders
If you're self-employed or a more-than-2% shareholder in an S corporation, you may be able to deduct Medicare premiums as an "above-the-line" deduction. This means:

• You don't have to itemize to claim the benefit
• The 7.5% AGI threshold doesn't apply

This provision is beneficial for individuals who may not exceed the higher standard deduction threshold but still want to reduce taxable income.

Don't Overlook Additional Deductible Expenses
Other deductible health-related costs include:

• Qualified long-term care insurance premiums (subject to age-based limits)
• In-home nursing services
• Durable medical equipment and devices
• Special education or therapy services related to medical diagnoses
• Travel and lodging expenses for out-of-town medical treatment (with limits)

Keep detailed records of payments, receipts, and mileage to support your deduction and ensure accuracy if ever reviewed by the IRS.

Maximize Your Health Care Tax Strategy
Healthcare costs can add up quickly in retirement, but they may also create significant tax savings. Understanding how and when to deduct those expenses can make a real difference. Need help evaluating your options? Our team is here to guide you through the latest rules, assess your situation, and help you plan ahead for tax efficiency.