The Republicans in Congress are very close to passing the final version of their tax cut, marking the first major piece of legislation to be passed under the Trump administration. The bill will reduce tax rates for businesses and individuals. It will lower the amount individuals can deduct for state and local taxes, offer new deductions, and double the standard deduction for individuals and families.
But one thing we had been concerned about was the proposed elimination of the medical expense deduction which allows tax payers with healthcare costs in excess of 10% of their income to deduct those costs from their tax bill.
This deduction is a massive relief to people with extremely high medical bills. Often, these individuals not only have high expenses, but also limited earning power as a result of their medical condition. Eliminating the deduction would have placed a new burden on people already struggling.
Well, some good news! The GOP elected to keep that deduction. In fact, they have made if even better, at least temporarily. For one year they have lowered the threshold for the medical expense deduction to 7.5% of income. It will return to 10% in 2019.
This is great news for patients with very high medical costs.