Will Health Care Tax Breaks Change in 2026?
As things stand, the future of health care tax relief remains uncertain. The biggest immediate risk to consumers is the potential expiration of enhanced ACA subsidies. Without congressional action, millions of people could face substantial premium increases starting in 2026.
Hawley’s deduction proposal does not solve that problem in the near term. Instead, it represents an alternative vision for how health care affordability might be addressed through the tax system rather than through direct subsidies.
That sets up a clear policy divide:
- Democratic approach: Extend or expand ACA subsidies
- Hawley’s approach: Reduce taxes on medical spending after the fact
Each strategy reflects a fundamentally different philosophy about how government should intervene in health care affordability—through upfront assistance or delayed tax relief.
The Bottom Line
Sen. Josh Hawley’s “No Taxes on Healthcare Act” proposes one of the most expansive health-related tax deductions in U.S. history, allowing households to deduct up to $25,000 per person in out-of-pocket medical costs, including self-paid insurance premiums.
The proposal would significantly change who benefits from medical tax relief, shifting advantage toward middle- and upper-middle-income taxpayers with large medical bills and substantial tax liability. However, it offers limited help to low-income households and does nothing to prevent coverage loss if ACA subsidies expire.
For now, the bill remains only a proposal—one that reflects the broader GOP push toward tax-based solutions but faces steep fiscal and political obstacles. Meanwhile, the fate of ACA subsidies remains unresolved, ensuring that the debate over health care affordability will remain front and center heading into 2026.
