Earlier this month, the IRS released Notice 2024-71 which provided a safe harbor to claim an income tax deduction for the purchase of condoms. Similarly, the IRS also issued Notice 2024-75 which stated that over-the-counter oral contraceptives can be provided by a high-deductible health plan without the payment of a deductible. But these contraceptives are not deductible as a medical expense.
The treasury regulations state that in order to claim an income-tax deduction for medical expenses, the payment must be made primarily for the prevention or alleviation of a physical or mental defect or illness. But they are not allowed for expenses that are merely beneficial to an individual’s general health, such as monthly gym membership fees.
Before the release of this notice, the IRS interpretation of this rule as applied to condoms was likely to the taxpayer’s displeasure. It is known that proper condom use minimizes the chances of transmitting sexually transmitted diseases (STDs). But most people purchase condoms primarily for contraceptive purposes. Pregnancy — even the unwanted kind — is not considered a medical illness.
The notice does not make a distinction for gender. In other words, a woman can purchase condoms designed for men or female condoms and still claim the deduction.
This safe harbor notice provides favorable guidance for the taxpayer by presuming that all condom purchases are made for the prevention of disease, thus qualifying it for an income-tax deduction.
The medical deduction can be claimed in a number of ways. The first way is to claim the purchase as an itemized deduction. In order to do so, the total medical expenses for the taxpayer, his or her spouse, and dependents must exceed 7.5% of the taxpayer’s adjusted gross income. Also, the total itemized expenses must exceed the standard deduction which is $14,600 in 2024. These spending requirements coupled to the relatively low cost of condoms can make it difficult for some taxpayers to claim the deduction.
The other way to deduct the cost of condom purchases is through a Health Savings Account (HSA), a health Flexible Spending Arrangement (FSA) plan, or a Health Reimbursement Arrangement (HRA). While the details vary, these plans generally allow pre-tax money to be used for medical expenses. FSAs and HRAs are generally provided by the taxpayer’s employer. HSAs can be set up by the taxpayers individually although they must have a high-deductible health plan to qualify.
What prompted the IRS to issue these prophylactic announcements is unknown. Reported cases of STDs have been flat in recent years (although syphilis cases have increased). Also, teen pregnancies reached historic lows in 2022. Perhaps this will encourage younger people to start tax-advantaged HSAs or participate in their employers’ FSA and HRA plans. The tax savings can be used to go on a date at a nicer restaurant or buy more condoms.
Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.
