November 4, 2008	2008-R-0591
State Income Tax deductions for Medical Expenses
By: Judith Lohman, Chief Analyst

You asked which states have state income tax deductions for medical expenses and what the deductions are. This report has been updated by OLR Report 2011-R-0412.

The information in this report is based on a summary by the Wisconsin Legislative Fiscal Bureau of Individual Income Tax Provisions in the States (Informational Paper 4, January 2007).  Since the Wisconsin report applies to the 2005 tax year, we updated the information by surveying state income tax forms and instructions for the 2007 tax year.

summary

Forty-one states and the District of Columbia have broad-based state personal income taxes.  Of these, 35 allow taxpayers to deduct qualified medical expenses when calculating tax liability. Seven, including Connecticut, do not.  Of the 35 states that have medical expense deductions, 20 have the same deduction allowed under the federal tax law and 15 have state deductions that vary from the federal deduction in one or more respects.

Federal tax deduction for medical expenseS

When calculating federal taxable income, a taxpayer may deduct eligible, unreimbursed medical and dental expenses that exceed 7.5% of the taxpayer’s federal adjusted gross income (AGI).  Deductible expenses include insurance premiums for medical and dental care other than premiums already deducted under the self-employed health insurance deduction. Deductible long-term care insurance premiums are limited based on age.  The limits for 2007 were:

Age	Deduction Limit
40 or under	$ 290
41 to 50	550
51 to 60	1,110
61 to 70	2,950
71 and over	3,680

The limits apply to premiums for each person.  The long-term care policy must also meet certain minimum standards.

State tax deductions for medical expenses

Thirty-four states and the District of Columbia have medical expense deductions in their state income taxes.  Seven states do not. The remaining nine states have no broad-based state income taxes. 

Of the states with medical expense deductions, 20 use the federal deduction with no change and 15 deviate from the federal deduction in certain respects.  The most common differences are to (1) allow additional expenses to be deducted, (2) base the 7.5% exclusion on state rather than federal AGI, or (3) provide a 100% deduction or separate credit for qualifying long-term care insurance premiums.  State deductions generally use federal definitions for determining which expenses are deductible.

Table 1 shows how each state treated medical expenses for purposes of its income tax in the 2007 tax year. 

Table 1:  State Income Tax Deductions for Medical Expenses

2007 Tax Year

(* = states with long-term care insurance tax credits)

State	Medical Expense Deduction
Alabama	Expenses exceeding 4% of AGI (long-term care premiums are fully deductible)
Alaska	No state income tax
Arizona	100% of medical expenses
Arkansas	Same as federal
California	Same as federal except medical expenses paid on behalf of a domestic partner are deductible.
Colorado*	Same as federal
Connecticut	None
Delaware	Same as federal
District of Columbia	Same as federal
Florida	No state income tax
Georgia	Same as federal
Hawaii	Expenses exceeding 7.5% of Hawaii AGI.
Idaho	Same as federal
Illinois	None
Indiana	None
Iowa	Same as federal except subtract expenses for the purchase of health benefits coverage or insurance if those expenses are exempted in determining Iowa net income.
Kansas	Same as federal
Kentucky	Expenses exceeding 7.5% of Kentucky AGI
Louisiana	None
Maine	Same as federal
Maryland*	Same as federal
Massachusetts	Expenses exceeding 7.5% of Massachusetts AGI
Michigan	None
Minnesota*	Same as federal
Mississippi	Same as federal
Missouri	Same as federal
Montana	Expenses exceeding 7.5% of Montana AGI
Nebraska	Same as federal
Nevada	No state income tax
New Hampshire	Income tax limited to interest and dividends only
New Jersey	Expenses exceeding 2% of New Jersey AGI
New Mexico	100% of medical expenses.  Medical expenses for services provided by a medical doctor, osteopath, dentist, podiatrist, chiropractic physician, or psychologist must be provided by a person licensed or certified to practice in New Mexico. Taxpayers or spouses aged 65 or over who pay unreimbursed and uncompensated medical care expenses of $28,000 or more during tax year 2007 may claim an exemption of $3,000.
New York*	Same as federal except subtract amount paid for long-term care insurance premiums from medical expense total.
North Carolina	Same as federal

Table 1:-Continued-

State	Medical Expense Deduction
North Dakota	100% of medical expenses.  In addition, the state allows a credit for qualified expenses for caring for a family member who is at least 65 years old or disabled and related to the taxpayer by blood or marriage. The family member claiming the credit must have an annual taxable income of no more than $15,000 if single or $30,000 if married, including the income of the member's spouse. A taxpayer whose taxable income is under $25,000 may claim 30% of qualified expenses. Taxpayers who earn more than $25,000 can claim the greater of 20% of the qualified care expenses or 30% of the expenses, less 1% of the expenses for each $2,000 or fraction thereof by which the taxpayer's taxable income exceeds $25,000. The credit is reduced by $1 for each $1 of taxable income that a taxpayer earns over $50,000 and is limited to $2,000 per family member per year or $4,000 for two or more family members. The credit is nonrefundable, may be prorated among several taxpayers, and may not be claimed as a carryback or carryforward.
Ohio	Same as federal except 100% of long-term care insurance premiums
Oklahoma	Same as federal
Oregon*	Same as federal, except taxpayers age 62 or over by the end of the tax year may exclude 100% of medical expenses.
Pennsylvania	None
Rhode Island	Same as federal
South Carolina	Same as federal
South Dakota	No state income tax
Tennessee	Income tax limited to interest and dividends only
Texas	No state income tax
Utah	Same as federal except 100% of long-term care insurance premiums
Vermont	Same as federal
Virginia	Same as federal
Washington	No state income tax
West Virginia	None
Wisconsin	Same as federal
Wyoming	No state income tax

JL:ts