A bipartisan bill that would maintain the medical expense tax deduction for older adults at the current rate of 7.5% of adjusted gross income for an additional two years would spare at least 5 million seniors from a tax increase in 2017, according to David S. Schless, president of the American Seniors Housing Association.
If no action is taken on the legislation introduced last week by U.S. Sens. Sherrod Brown (D-OH) and Rob Portman (R-OH), or on similar legislation, the threshold to claim the deduction is set to increase to 10% of income on Jan. 1.
Findings of a 2015 ASHA study on the issue “made it abundantly clear that middle-income taxpayers, such as the residents of market-rate senior living and care, would be adversely impacted by the expiration of this tax deduction,” Schless told McKnight’s Senior Living. Older women with serious health conditions would be affected the most, he added.
“Over the years, ASHA’s advocacy efforts include those issues that not only impact our members but, when appropriate, their resident community as well,” Schless said. “This is one of those issues, and we are going to work diligently to try and prevent this tax increase.”
The AARP also supports the effort.
In announcing the bill, Portman said: “The rising cost of healthcare is a critical issue for every American, but especially for seniors who live on fixed incomes. And since seniors are often faced with higher medical expenses, this deduction provides important tax relief to help offset many of these costs.”
Until the 2013 tax year, all income tax filers who itemized deductions could claim a deduction for medical expenses if those expenses exceeded 7.5% of their adjusted gross incomes. After the Affordable Care Act was passed, the threshold was changed so that filers can claim the deduction only if their medical expenses exceed 10% of income. A two-year extension of the 7.5% threshold, lasting through 2016, was passed by Congress for anyone aged 65 or more years, however.