Stop Chasing Popular Tax Deductions: The Reality for High-Income Households

Can I deduct medical or dental expenses on my taxes?  The Short Answer: Most high-income households do not benefit from the medical and dental expense tax deduction because expenses must exceed 7.5% of adjusted gross income (AGI) to qualify.  

Every year, we get variations of the same question from our clients: 

“Can I deduct medical or dental expenses on my taxes?” 

It’s a fair question. Articles, social media posts, and year-end tax checklists often highlight medical expenses as a potential deduction. And for some taxpayers, it can be helpful. 

But for many high-income households, the answer is usually simple: 

No—this deduction likely doesn’t apply. 

Let’s talk about why. And more importantly, what this tells us about how tax planning actually works for affluent families. 

The Medical and Dental Expense Deduction: The Reality 

The IRS allows taxpayers to deduct unreimbursed medical and dental expenses, but only the portion that exceeds 7.5% of adjusted gross income (AGI). That threshold is where things break down for high earners. 

(Unreimbursed, meaning costs that you pay out-of-pocket and aren't covered or repaid by your insurance, employers, or other third parties.) 

A simple example: 

• Household AGI: $400,000 

• 7.5% of AGI: $30,000 

That means the first $30,000 of medical expenses don’t count at all. Only unreimbursed expenses above that level may be deductible—and only if the household itemizes deductions instead of taking the standard deduction. 

Even with significant healthcare costs, it's rare for high-income families to cross that line. 

This is why, when our clients ask about this deduction, the answer is often quick and definitive. Not because the rule is complicated—but because the math usually works against them. 

This Isn’t Just About Medical Expenses 

Medical and dental deductions are just one example of a broader pattern in the tax code. 

Many of the deductions and credits that get the most attention sound generous and make for great headlines, but realistically apply most cleanly to moderate or lower incomes due to income thresholds, phaseouts, or other limitations noted below. 

Some common themes: 

• Deductions that require unusually high expense levels relative to income 

• Credits that phase out entirely above certain AGI ranges 

• Itemized deductions that no longer exceed the standard deduction 

• Limits that cap the benefit regardless of how much you spend 

None of this is accidental. The tax code treats income differently as it rises, and many “popular” tax breaks are simply not designed with affluent households in mind. 

Why Popular Deductions Often Lead Nowhere for High-Income Households 

The bigger issue isn’t missing out on a medical deduction. It’s getting distracted by tax “bait.” 

Every tax season—and increasingly, all year long—there’s a steady stream of content that starts with: 

“Did you know you can deduct…”  

“Don’t forget this overlooked tax break”  

“Most taxpayers miss this…” 

For high-income households, these ideas often don’t apply or don’t significantly move the needle. They can also create unnecessary complexity and pull focus away from what actually matters 

Chasing small or unlikely deductions can feel productive, but here’s the reality: it rarely leads to meaningful, lasting tax savings for affluent families. 

What Does Matter for High-Income Tax Planning 

For higher earners, effective tax planning tends to be strategic, forward-looking, and integrated with the rest of your financial life, rather than reactive. 

The most impactful opportunities often involve:  

• How income is earned, timed, and characterized  

• Business ownership and equity compensation  

• Charitable strategies designed intentionally, not opportunistically  

• Coordinating tax decisions with investment, estate, and goals-based planning 

These strategies usually don’t show up in listicles or breaking-news tax articles. They take more context, modeling, and expertise to deliver deeper value. 

At Plancorp, we believe that focusing on managing your lifetime tax liability, rather than optimizing for one year at a time, can have a bigger impact, particularly at higher levels of wealth, where tax strategy gets more complex.  

For our clients, this often looks like:  

• Staying on top of tax projections to avoid surprises 

• Optimizing savings and withdrawal strategies to favor tax-advantaged accounts  

• Incorporating unique trust strategies to shield assets from estate taxes 

Why This Is Hard to DIY 

One reason questions about deductions keep coming up is that the tax code doesn’t always make it obvious who a rule is designed to help. 

On paper, a deduction may be available to “any taxpayer.” In practice, income thresholds and limitations tell a different story. 

This is where working with advisors who understand both tax rules and real-world application can make a big difference. Not to chase every possible deduction, but to quickly rule out distractions and focus energy where it counts. 

The Bottom Line 

Medical and dental expense deductions are a good example of a broader truth: 

For high-income households, most tax savings don’t come from individual deductions highlighted in the news. They come from thoughtful, coordinated planning over time. 

If you find yourself repeatedly asking, “Does this deduction apply to me?”—and the answer is usually no—that’s not a failure. Rather, it’s often a sign that your tax strategy should be operating at a higher level.

Explore how we incorporate tax strategy into our clients' comprehensive wealth management and get in touch today to develop a proactive, long-term plan tailored to your specific needs and goals.