- Republicans released their massive tax reform bill on Thursday.
- Part of the plan would repeal an itemized deduction related to medical expenses.
- The provision could impact people who spend a lot on healthcare, and who have historically been able to subtract that amount from their federal taxes.
Republicans in the House of Representatives are set to reveal their tax plan, titled the “Tax Cuts and Jobs Act.”
The bill sets up a broad set of changes to the corporate and individual tax systems, including major changes to the things that can be deducted from your federal taxes.
The Republican tax plan repeals an itemized deduction that applies to healthcare expenses. That’s key for families with high medical costs, like those dealing with chronic conditions that require medical devices and other expensive equipment. Right now, those expenses can be deducted from their taxes, but under the Republican tax plan, they wouldn’t be able to.
Under current law, individuals who spend over 10% of their income on medical expenses are allowed to deduct part of those costs from their taxes. The proposed new bill would remove that deduction. According to the Internal Revenue Service, for 2016 taxes, individuals were able to deduct in an itemized way “only the amount of your unreimbursed allowable medical and dental expenses that is more than 10 percent of your adjusted gross income.”
The IRS broadly defines medical expenses as the “costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body,” including insurance premiums, devices, and long-term care.