Is Medicare Part B Tax Deductible?

Medicare Part B, also known as medical insurance, covers certain doctors' services, outpatient care, medical supplies, and preventive services. The question of whether these premiums are tax deductible is important for retirement tax planning.

The short answer is yes — Medicare Part B premiums can be deducted as a medical expense on your federal tax return. However, there are important qualifications and thresholds you need to understand.

To claim this deduction, you must itemize your deductions on Schedule A rather than taking the standard deduction. Only medical expenses that exceed 7.5% of your adjusted gross income (AGI) are deductible.

The 7.5% AGI threshold is the key hurdle for deducting Medicare premiums. For example, if your AGI is $100,000, only medical expenses above $7,500 can be deducted.

This means you'll want to track all qualifying medical expenses — not just Medicare premiums. Other deductible medical expenses include dental care, vision care, prescription drugs, long-term care insurance premiums, and out-of-pocket medical costs.

For those subject to IRMAA surcharges, the additional premiums can push your total medical expenses above the 7.5% threshold, potentially making itemizing worthwhile.

Self-employed individuals may be able to deduct Medicare premiums as a business expense, which is an above-the-line deduction that doesn't require itemizing. This can be more advantageous than the medical expense deduction.

Financial professionals should help clients evaluate whether itemizing deductions with Medicare premiums provides a greater benefit than the standard deduction. Strategic planning around MAGI management can optimize both IRMAA costs and tax deductions.