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An analysis of the medical expense deduction under the U.S. income tax system

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  • Serocki, James S.
  • Murphy, Kevin J.

Abstract

This article analyzes the medical expense deduction based on several years of Internal Revenue Service public use file detailed individual tax return data. The medical expense deduction is allowed by the U.S. Internal Revenue Code for individual income taxpayers who itemize their deductions with certain limitations. Our analysis reveals several interesting findings. In particular, change in the limitation for adjusted gross income has had a dramatic effect on the income profile of taxpayers who claim medical expense deductions (while medical expense dollars have increased dramatically). In addition, we find the medical expense deduction has a small but a generally progressive effect across the income spectrum of U.S. taxpayers. Furthermore, elimination of the medical expense deduction would have a modestly adverse effect on income equality.

Suggested Citation

  • Serocki, James S. & Murphy, Kevin J., 2009. "An analysis of the medical expense deduction under the U.S. income tax system," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 343-356, May.
    • Handle: RePEc:eee:quaeco:v:49:y:2009:i:2:p:343-356
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    1. Francine D. Blau & Lawrence M. Kahn, 2007. "Changes in the Labor Supply Behavior of Married Women: 1980–2000," Journal of Labor Economics, University of Chicago Press, vol. 25(3), pages 393-438.
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    3. Paul J. Devereux, 2004. "Changes in Relative Wages and Family Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
    4. Robert K. Triest, 1990. "The Effect of Income Taxation on Labor Supply in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 491-516.
    5. Southwick, Lawrence Jr. & Cadigan, John Jr., 1983. "The medical expense deduction and income levels: Progressive or regressive?," Journal of Economics and Business, Elsevier, vol. 35(1), pages 61-70.
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    1. Andrey A. Pugachev, 2023. "Assessment of the Impact of Social Tax Deductions for Personal Income Tax on the Welfare and Inequality of Citizens in Russia," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(4), pages 789-813.

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