How the Proposal Would Change Current Law
Under current tax rules, medical expenses are deductible only if:
- The taxpayer itemizes deductions, and
- Medical spending exceeds 7.5% of AGI
For example, a household earning $100,000 per year must spend more than $7,500 on qualifying medical costs before any portion becomes deductible—and only the amount beyond that threshold counts. This restriction makes the current medical deduction inaccessible for most taxpayers.
Hawley’s plan would eliminate both of these limitations:
- The deduction would be available to all taxpayers, including those who take the standard deduction.
- Taxpayers could deduct up to $25,000 per person, regardless of income level or percentage thresholds.
- Qualifying expenses would include health insurance premiums paid directly by households, not just traditional medical services.
This structure would dramatically broaden eligibility and could allow some households to shield tens of thousands of dollars in income from federal taxation.
