What Counts as Medical Expense Bunching to Let You Itemize

A woman carefully reviews a medical bill at her desk, surrounded by paperwork, while calculating her total expenses.

When it comes to saving money on your taxes, most people take the standard deduction without giving it a second thought. But if you have high medical costs in a given year, you may be able to benefit from a strategy known as medical expense bunching. By timing when you pay for certain medical expenses, you can potentially exceed the threshold for itemizing, which may save you thousands of dollars on your return.

Medical expense bunching is especially useful for taxpayers in California, where the rules conform closely to federal guidelines. Understanding What Counts as Medical Expense Bunching and how this strategy works and whether it applies to your situation is key to maximizing your tax savings.

What Counts as “Medical Expense Bunching” and Why Does It Matter?

Medical expense bunching is the practice of shifting your deductible expenses into a single tax year so that they exceed the threshold required for itemization. Instead of spreading out payments evenly, you intentionally consolidate them.

A Simple Definition of Bunching

In plain terms, bunching means grouping as many deductible medical expenses as possible into one year. That way, your total medical costs exceed the IRS minimum threshold, allowing you to deduct them from your taxable income.

Why Bunching Helps Taxpayers Save

Without bunching, many taxpayers fall short of the required minimum, leaving money on the table. By stacking expenses in one year, you itemize in that year and then take the standard deduction in the following year. It is a timing strategy designed to make the tax code work in your favor.

For a straightforward explanation of this concept, resources like NerdWallet provide a helpful foundation.

The 7.5% AGI Threshold: The Key Rule for Medical Deductions

To deduct medical expenses, they must exceed 7.5 percent of your Adjusted Gross Income (AGI). This is the benchmark you need to keep in mind when considering bunching.

Understanding the 7.5% Rule

Suppose your AGI is $100,000. You can only deduct medical expenses above $7,500. If your qualifying expenses total $10,000, you may deduct $2,500. If they total only $6,000, you do not qualify to deduct them at all.

How Standard Deduction Compares

For most taxpayers, the standard deduction is easier and often more beneficial. But when medical costs are unusually high in a year, bunching allows you to exceed the threshold and make itemization worthwhile.

For more detail, the IRS provides a full breakdown in Publication 502.

Internal link placement: When reviewing tax planning options, readers can be directed to KY Tax Service & Bookkeeping services.

What Expenses Qualify Under IRS Rules?

The IRS outlines what you can and cannot count as deductible medical expenses. These rules are central to bunching, since not every health-related cost qualifies.

Commonly Deductible Medical Costs

Examples of deductible expenses include:

• Doctor and hospital visits

• Dental treatment, including braces

• Prescription medications

• Eyeglasses and contact lenses

• Mental health counseling

• Long-term care insurance premiums

• Mileage to and from medical appointments

Expenses That Do Not Qualify

Some common costs do not count toward deductions, such as:

• Cosmetic surgery not medically necessary

• Over-the-counter vitamins or supplements

• Gym memberships

• Non-prescription health aids

For the official list, consult IRS Publication 502 (PDF).

How to Bunch Medical Expenses: Practical Examples

To understand bunching, it helps to look at examples.

Two-Year Scenario Planning

Imagine a family with an AGI of $100,000. Their child needs braces, and one parent is considering an elective surgery. If they schedule and pay for both in the same tax year, their medical expenses surpass the $7,500 threshold. They can itemize and claim the deduction. The following year, when their costs are lower, they revert to the standard deduction.

Coordinating with Other Itemized Deductions

Bunching can be even more powerful when combined with other deductions, such as charitable contributions or property taxes. By stacking multiple categories of expenses in the same year, taxpayers maximize the benefit.

Internal link placement: When discussing proper tracking of receipts and timing, link to KY Tax Service bookkeeping.

California Taxpayers: What You Need to Know

California follows the federal rule for medical expense deductions. This means the same 7.5 percent threshold applies, but there are a few nuances worth noting.

Federal vs California Rules

For California residents, deductible expenses align with federal law, which simplifies planning. However, local tax filings can have additional requirements, making professional advice critical.

Why Local Expertise Matters

Many national resources stop short of explaining how these rules work in California. Local professionals provide clarity and ensure compliance with state and federal requirements.

Internal link placement: This is an ideal place to link to Understanding California’s Current Tax System.

External link placement: Refer readers to the Franchise Tax Board’s guide for official state details.

Is Medical Expense Bunching Right for You?

Not every taxpayer will benefit from this strategy. The right answer depends on your unique situation.

Who Benefits the Most?

• Seniors with ongoing medical needs

• Families with orthodontic or major surgical expenses

• Individuals with long-term care costs

When You Should Stick With Standard Deduction

If your expenses are consistently low or close to the threshold, the standard deduction likely remains your best option.

Internal link placement: End this section with a CTA to KY Tax Service contact page for a personalized consultation.

Conclusion: Contact KY Tax Service & Bookkeeping to Answer All Your Questions

Kim Yurosko, Owner of KY Tax Service & Bookkeeping answering a customers call

Medical expense bunching is a smart tax strategy for individuals and families who face high medical costs in a given year. By carefully timing when you pay certain bills, you may be able to itemize your deductions and lower your taxable income.

For California residents, knowing how federal and state rules align is especially valuable. With professional support, you can determine whether this approach is right for you.

If you want to make the most of your tax planning opportunities, reach out to the professionals at KY Tax Service & Bookkeeping for guidance tailored to your situation.

Frequently Asked Questions (FAQ)

What is the rule of thumb for medical expense deductions?

You may deduct qualifying medical expenses that exceed 7.5 percent of your AGI. Only the portion above that amount is deductible.

How much in medical expenses do I need to itemize?

The total must be large enough to surpass the 7.5 percent AGI threshold and make itemizing more beneficial than taking the standard deduction.

Can you claim medical expenses if you don’t itemize?

No, medical expenses are only deductible if you itemize. If you claim the standard deduction, you cannot also claim medical expenses.

What medical expenses are tax deductible?

Expenses like doctor visits, prescriptions, dental work, and long-term care insurance are deductible. Cosmetic surgery and over-the-counter items generally are not.

Does California follow federal medical deduction rules?

Yes, California uses the same 7.5 percent AGI threshold as federal law, which simplifies planning for state residents.