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Are OTC Medications Tax Deductible?

Maggie Aime, MSN, RN
Published on January 2, 2025

Key takeaways:

  • Over-the-counter (OTC) medications, such as Tylenol and Tums, do not require a prescription and are not tax deductible. The only exception is insulin. 

  • The IRS allows you to deduct medications that are prescribed by a healthcare professional.

  • You can still save money on OTC medications by using a flexible spending account and other tax-advantaged health accounts. 

A woman shops at a pharmacy.
Rockaa/E+ via Getty Images

When you’re experiencing pain or a common cold, you may turn to over-the-counter (OTC) medications first. These might include common medications such as acetaminophen (Tylenol) for fevers or loratadine (Claritin) for allergy relief. They may ease your symptoms without the need for a prescription. 

But as you add up your healthcare costs for the year, you’re probably wondering if your OTC medications are tax deductible. It’s not always clear which healthcare purchases qualify for tax deductions. 

The IRS has set guidelines: Prescription medications can be deducted, but over-the-counter (OTC) medications typically don't qualify, with one important exception to this rule. 

Can you deduct OTC medications on your tax return?

No. You can’t deduct most over-the-counter medications on your tax return. According to IRS Publication 502, you can only deduct medications that require a prescription by a healthcare professional. This means nonprescription medications can't be claimed as medical expenses on your taxes. For example, even if a healthcare professional suggests taking a daily aspirin for your heart, you can't deduct the cost because aspirin is available without a prescription. 

There’s just one exception to this rule: Insulin can be deducted whether it's prescribed or bought over the counter. While some types of insulin are available without a prescription, you’ll need to ask for them at the pharmacy counter

Here are some common OTC products that are not tax deductible:

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Keep in mind that medical expenses count as deductions if you itemize them on your tax return and the total is more than 7.5% of your adjusted gross income (AGI). If you’re unsure whether an expense qualifies as a tax deduction, save your receipts and talk to a tax professional.

What are the rules for qualified medical expenses?

The IRS defines qualified medical expenses as costs you pay for the diagnosis, treatment, prevention, or cure of a health condition. A good way to think about it is to ask yourself: Does this directly treat, diagnose, or prevent a specific health condition? If the answer is no, it likely won't count. For example, prescription eyeglasses to correct your vision would qualify, while nonprescription sunglasses wouldn't.

Common qualified medical expenses include:

But not everything related to health counts as a qualified medical expense. General wellness items or services that don’t directly treat or prevent a medical condition aren’t eligible. Examples include:

Can you deduct prescription medications on your tax return?

Yes. You can deduct the cost of prescription medications on your tax return, as long as they’re ordered by a licensed healthcare professional and not reimbursed by insurance. This includes both brand-name and generic prescription medications that you pay for out of pocket.

Examples of deductible prescription medications include:

Only the amount you pay out of pocket matters. Let’s say a medication costs $100, but your insurance covers $80 and you pay $20. You can only count the $20 copay when calculating your deductions. The same goes for any discounts or manufacturer coupons — the portion of the cost covered by them is not tax deductible. 

How do you deduct your medications on your tax return? 

To deduct prescription medications and over-the-counter insulin on your tax return, you'll need to keep careful records and itemize your deductions. This means listing all eligible expenses instead of taking the standard deduction. Here's how to do it:

1. Keep accurate records 

Your records should include all receipts from pharmacies and medical suppliers for the tax year. Make sure these documents show what you paid after insurance coverage and any discounts or coupons. The IRS may request documentation if your return is audited.

2. Calculate your medical expenses  

Prescription medications and insulin are just part of your total medical deductions. You can also include costs including office visit copays, medical devices, and transportation for medical care. Don't include any costs reimbursed by your insurance or employer.

3. Determine if you meet the threshold 

Calculate 7.5% of your adjusted gross income. For example, if your AGI is $60,000, multiply it by 7.5% to get $4,500. This is your threshold, and you can deduct qualified medical expenses that exceed this amount. So, if your total medical expenses are $6,000, you could deduct $1,500 of that total.

4. Report on your tax return

To claim your deduction, use Schedule A (Form 1040) when filing your tax return. This form allows you to itemize all eligible deductions, including medical expenses, charitable donations, mortgage interest, and state and local taxes. The total of all your itemized deductions on Schedule A will replace the standard deduction on your tax return. You’ll then enter your total itemized deductions on line 12 of your Form 1040.

Still, itemizing deductions isn't the best choice for everyone. Running the numbers both ways and talking with a tax professional can help you decide what's best for you. Choose the option — either itemizing or standard deduction — that lowers your tax bill the most.

Ways to save on OTC medications

You may not be able to deduct OTC medications come tax time, but you can still keep more money in your pocket with these 6 tips:

  1. Buy store brands. Store-brand medications contain the same active ingredients as their brand-name counterparts but often cost less. For example, store-brand acetaminophen is the same as Tylenol, and store-brand loratadine is the same as Claritin.

  2. Use GoodRx. GoodRx is great for prescription savings, and it can also help with some OTC medications. Ask a healthcare professional for a prescription for the OTC item, then search the GoodRx website or app and show your coupon at the pharmacy counter (not the regular store register). It’s an easy way to save, especially on items for which you might not think to ask about savings.

  3. Take advantage of your HSA or FSA. Thanks to the CARES Act, you can now use your health savings account (HSA) or flexible spending account (FSA) to buy OTC medications. These include common items such as pain relievers, cough medicines, and even some skin care treatments.

  4. Stock up during sales. Keep an eye out for sales or promotions, especially during seasonal shifts when cold, flu, or allergy medications are in high demand. Buy-one-get-one deals are a great way to double your supply without doubling the cost.

  5. Buy in bulk. If you frequently use certain OTC medications, consider buying them in bulk at warehouse stores. Larger quantities often come with a lower price per unit. Just check those expiration dates and store your medicines according to the manufacturers’ instructions.

  6. Shop around before you buy. These days, you can check OTC medication prices right from your couch by browsing store apps and websites. Prices can vary by several dollars for the same product, even between stores in the same neighborhood.

Even with OTC medications, it’s worth a quick chat with your medical care team to make sure they won’t cause any interactions with your other medicines.

The bottom line

Over-the-counter (OTC) medications are not tax deductible, except for insulin. Prescription medication costs can be deducted, but only if you itemize deductions and your total medical expenses exceed 7.5% of your adjusted gross income. 

While you can’t deduct most OTC medications, there are still plenty of ways to save. These include choosing store brands, using a GoodRx coupon, and paying with your health savings account (HSA) or flexible spending account (FSA). Be sure to keep all your medical receipts throughout the year. If you’re unsure about what qualifies, a tax professional can help.

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Why trust our experts?

Maggie Aime, MSN, RN
Maggie's writing brings health topics to life for readers at any stage of life. With over 25 years in healthcare and a passion for education, she creates content that informs, inspires, and empowers.
Charlene Rhinehart, CPA
Charlene Rhinehart, CPA, is a personal finance editor at GoodRx. She has been a certified public accountant for over a decade.
GoodRx Health has strict sourcing policies and relies on primary sources such as medical organizations, governmental agencies, academic institutions, and peer-reviewed scientific journals. Learn more about how we ensure our content is accurate, thorough, and unbiased by reading our editorial guidelines.

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