Prescription costs are tax deductible only if you itemize deductions and they exceed a threshold based on your income

Most people cannot deduct prescription drug costs because the standard deduction is larger than their medical expenses. However, if your total medical and dental costs for the year are high enough, you can deduct the amount that exceeds 7.5% of your adjusted gross income (AGI). Prescriptions count toward that threshold, but only if you itemize deductions instead of taking the standard deduction.

The IRS treats prescription medications the same way it treats other out-of-pocket medical costs: doctor visits, dental work, glasses, hearing aids, and medical equipment. If you pay for prescriptions yourself—not through insurance—they go into the same pile. You add them up, subtract 7.5% of your AGI, and only the remainder is deductible.

Key Takeaways

  • Prescription costs are deductible only if your total medical expenses exceed 7.5% of your adjusted gross income and you itemize deductions on Schedule A.
  • The 7.5% threshold applies to all medical costs combined—prescriptions, doctor visits, dental work, and medical equipment—not to prescriptions alone.
  • If your standard deduction is larger than your itemized deductions, you cannot deduct prescriptions at all.
  • Prescriptions covered by insurance do not count as out-of-pocket costs and cannot be deducted.
  • You report medical deductions on Schedule A (Form 1040) only if you itemize; most taxpayers use the standard deduction instead.

How the 7.5% threshold works

The IRS does not let you deduct every dollar you spend on prescriptions. Instead, you must first calculate 7.5% of your adjusted gross income. Only medical costs above that amount are deductible.

For example: if your AGI is $60,000, then 7.5% equals $4,500. If your total medical expenses (prescriptions, doctor visits, dental work, and so on) are $7,000, you can deduct only $2,500—the amount above the $4,500 threshold. If your medical expenses are $4,200, you cannot deduct anything because they fall below the threshold.

This threshold has been 7.5% since 2013. It applies to all medical costs you pay out of pocket, not just prescriptions. The IRS groups them together on your tax return.

Itemizing versus the standard deduction

Even if your medical expenses exceed the 7.5% threshold, you can only deduct them if you itemize deductions on Schedule A of your tax return. Most taxpayers use the standard deduction instead, which is simpler and often larger.

For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for married couples filing jointly. If your total itemized deductions—medical costs, state and local taxes, mortgage interest, charitable donations, and so on—add up to less than the standard deduction, you should take the standard deduction and forget about deducting prescriptions.

You must choose one or the other. You cannot take the standard deduction and also deduct medical costs. If you have very high medical expenses in a single year, itemizing might make sense; in most years, the standard deduction is the better choice.

What counts as a deductible prescription

The IRS allows you to deduct prescriptions that a doctor has written for you or your spouse or dependent. Over-the-counter medications do not count, even if a doctor recommends them—they must be prescribed. Insulin is the one exception: you can deduct insulin even if you buy it without a prescription.

Prescriptions you paid for out of your own pocket count. If your insurance covered the cost, that amount does not count as a deductible expense because you did not pay it. Only your copay, coinsurance, or the full cost of prescriptions your plan does not cover can be deducted.

Prescriptions for family members also count if they are your spouse or dependent. You combine all of these costs together when calculating whether you exceed the 7.5% threshold.

Prescriptions covered by insurance and HSAs

If your insurance plan covers a prescription, you cannot deduct the cost because your insurance paid it, not you. You can only deduct the portion you paid out of pocket—your copay or the difference between what the prescription cost and what insurance covered.

If you have a Health Savings Account (HSA) or Flexible Spending Account (FSA), you can pay for prescriptions with those accounts tax-free. Money you withdraw from an HSA or FSA for prescriptions is not taxed, so you do not need to deduct it separately on your tax return. Using an HSA or FSA is usually a better deal than trying to deduct prescriptions later.

Keeping records for the IRS

If you deduct medical expenses, keep receipts and records showing what you paid. The IRS does not require you to attach receipts to your tax return, but you must have them if the IRS asks. Pharmacy receipts, credit card statements, and insurance statements all work as proof.

For prescriptions, keep the receipt showing the date, the name of the medication, the amount you paid, and whether insurance covered any of it. If you use an HSA or FSA, your account statements also serve as records.

Keep these records for at least three years after you file your return. The IRS can ask to see them during that time.

When deducting prescriptions makes sense

Deducting prescriptions only makes sense if you have a year with unusually high medical costs and those costs exceed 7.5% of your income. This might happen if you had surgery, a major illness, or paid for multiple family members' medications in the same year.

If your medical expenses are spread across many years, you may never reach the 7.5% threshold. In that case, using an HSA or FSA is a better strategy because it reduces your taxes without requiring you to exceed a threshold.

Talk to a tax professional if you have high medical expenses in a single year. They can calculate whether itemizing makes sense for you and help you organize your records.

Frequently Asked Questions

Can I deduct prescriptions if I use the standard deduction?

No. You can only deduct prescriptions if you itemize deductions on Schedule A. If you use the standard deduction, you cannot deduct medical costs at all. For most people, the standard deduction is larger than their itemized deductions, so they use it instead.

Can I deduct over-the-counter medications?

No, except for insulin. Over-the-counter medications like pain relievers, cold medicine, and allergy pills do not count as deductible medical expenses, even if a doctor recommends them. They must be prescribed by a doctor to may have access to.

What if my spouse has high prescription costs?

If you file jointly, you combine your medical expenses with your spouse's. Both of your prescriptions count toward the 7.5% threshold. If you file separately, each of you calculates the threshold based on your own income, which usually results in a smaller deduction.

Do prescriptions my insurance covers count toward the deduction?

Only the amount you paid out of pocket counts. If insurance covered the full cost, you cannot deduct it. If you paid a copay or coinsurance, only that amount counts toward the 7.5% threshold.

Is it better to use an HSA or deduct prescriptions on my taxes?

An HSA is almost always better because the money goes in tax-free and comes out tax-free when used for prescriptions. You do not have to exceed a threshold. A deduction only helps if your total medical costs exceed 7.5% of your income, which is rare for most people.