Are OTC Medications Tax Deductible?

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:

• Cold and flu medicines

• Pain relievers, such as Tylenol (acetaminophen) or Advil (ibuprofen)

• Allergy medications

• Antacids

• Sleep aids

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• OTC medications may not be tax deductible, but many other medical expenses are. Here are dozens of qualifying expenses — and some might surprise you.

• Can you use your flexible spending account (FSA) to purchase OTC medications? Yes. The CARES Act expanded the list of FSA-eligible items to include OTC medications such as Tylenol and Tums. 

• Wondering if you can deduct your dental procedure? See what the IRS allows you to claim and how to do it.

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:

• Office visit copays

• Hospital stays and medical procedures

• Prescribed medical equipment and supplies, such as blood glucose monitors

• Prescription medications

• Mental health care from licensed professionals

• Medical-related transportation costs

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:

• Vitamins and supplements (unless prescribed to treat a specific condition)

• Gym memberships

• Most cosmetic procedures

• Toothpaste and other personal care items

• Vacations for general well-being

• Dancing or swimming lessons

• Nutrition programs

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:

• Antibiotics, such as amoxicillin and Keflex (cephalexin)

• Mental health medications, such as Celexa (citalopram), Abilify (aripiprazole), Latuda (lurasidone), Effexor (venlafaxine), and Xanax (alprazolam)

• Asthma and respiratory medications, such as Symbicort (budesonide / formoterol), Ventolin (albuterol), Flovent (fluticasone propionate), and Singulair (montelukast)

• Thyroid treatments, such as Synthroid (levothyroxine) 

• Seizure medications, such as Keppra (levetiracetam)

• Anti-viral medications, such as Valtrex (valacyclovir)

• Weight-management medications, including Wegovy (semaglutide) and Ozempic (semaglutide)

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.

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Written by:

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.

Edited by:

Charlene Rhinehart, CPA

Charlene Rhinehart, CPA, is a personal finance editor at GoodRx. She has been a certified public accountant for over a decade.

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