What percentage of adjusted gross income is the threshold for deductible medical expenses?

• A. 5%
• B. 10%
• C. 12.5%
• D. 7.5%

Answer: (D)

The amount you can deduct for medical expenses is limited by a floor based on a percentage of your adjusted gross income. Currently, that floor is 7.5% of AGI, and only the medical expenses that exceed that threshold can be deducted if you itemize deductions. This means you compare your total unreimbursed medical expenses to 7.5% of your AGI; the portion above that threshold is the deductible amount.

For example, if your AGI is $60,000, 7.5% of that is $4,500. If your unreimbursed medical expenses total $6,000, you could deduct $1,500. If they total $4,000, you wouldn’t get a deduction for medical expenses (since it doesn’t exceed the floor). This deduction only applies to itemizers and to qualified medical expenses; it doesn’t apply if you take the standard deduction.