Question

What is the logic for a ten percent medical deduction and a seven and half percent medical deduction? You must discuss what the percent base is and the logic.

Answer 1

The percent for medical expenses was at 7.5% till 2018 and has been increased to 10% in 2020. The logic for a certain percentage can be explained as below:

A deduction in medical expenses is taken by families or an individual who does not have a health insurance. In most of the surveys conducted by the IRS, most families pay up to 5-7% of their paycheck for health expenses. A typical family spends around 35% for housing, 15% for transportation , 20% for child car expenses, 15% for food ,5% for clothing and the rest for everything else. That leaves around 10% for other expenses or savings. Also, most people give up on a health insurance to afford a car since the operating costs of a car are almost equal to an annual health insurance. Most of the live on paycheck to paycheck which makes it difficult to afford health care insurance. Hence, the logic of 10% for health care expenses has been alloted. Also, since health care expenses have been skyrocketing due to inflation, the percentage has been increased from 7.5% to 10% in recent years. This allows those in the low income category to pay lesser taxes and ease financial burden.