There's almost always a tax angle whenever you face a major turning point in life, even if it seemingly has nothing to do with taxes. That's because taxes are always lurking in the background when life's biggest moments arrive. Going to college, getting married (or divorced), buying a home, retiring, and even dying – they all can impact your taxes. So, it should come as no surprise that there are even potential income tax implications for women who make the difficult decision to have an abortion. But now that Roe v. Wade has been overturned, new questions are popping up about those abortion-related tax consequences.
While the tax laws haven't changed since the U.S. Supreme Court reversed Roe v. Wade, women want to know if they can still take advantage of the tax breaks that help pay for an abortion. Some employers are also promising to cover the travel costs of workers who cross state lines to get an abortion. Will that increase the employee's taxable income? And what about contributions to organizations either supporting or opposing a woman's right to an abortion – can you still deduct those donations?
While taxes certainly aren't front of mind for women considering an abortion, these tax issues will ultimately impact the financial well-being of many women who decide to have the procedure. They may also affect the ability of advocacy groups on both sides of the abortion debate to persuade lawmakers to support their position. Other tax questions may bubble up as the legal landscape around abortion evolves but, hopefully, having answers to some of the current tax questions surrounding abortion will help women considering an abortion chart a course that works best for them.
Will the Costs of an Abortion Still Be Deductible as a Medical Expense?
If you itemize deductions on Schedule A (i.e., don't claim the standard deduction), you can deduct unreimbursed qualified medical expenses for yourself, a spouse and your dependents to the extent the total amount exceeds 7.5% of your adjusted gross income. However, only the costs of a legal abortion are qualified medical expenses for purposes of this tax deduction.
Before the repeal of Roe v. Wade, abortions were legal in all 50 states and the District of Columbia – although states could impose certain restrictions on the procedure. As a result, the costs of an abortion were generally deductible regardless of where in the country they were performed (assuming the other requirements for the medical expense deduction were satisfied). However, the legality of abortions will now be determined on a state-by-state basis – unless a federal law protecting abortion nationwide is enacted or a constitutional amendment doing the same is adopted, which in both cases is highly unlikely any time soon given the political polarization in the country right now. Therefore, going forward, expenses for an abortion will be deductible if the procedure is performed in a state where it's legal, but not deductible if it's performed in a state where abortion is illegal. (And note that determining if an abortion is legal in any particular state – or to what extent it's legal – may be tricky in certain states, especially when the use of abortion pills is considered.)
If a woman travels from one state to another to receive a legal abortion, some of her travel expenses may also be deductible in addition to the direct costs of the procedure (e.g., the doctor's fee). For instance, you can deduct amounts paid for transportation to and from an out-of-state abortion clinic. This includes bus, taxi, train, or plane fare. If you use your own car to travel for an out-of-state abortion, you can deduct your actual out-of-pocket expenses – such as the cost of gas, oil, and tolls – or you can elect to use the standard mileage rate for medical travel. (For 2022, the medical mileage rate is 18¢ per mile for the first half of the year and 22¢ per mile for the second half.) Expenses for travel within a single state to receive a legal abortion may also be deductible.
Hotel expenses can also be deducted, but not more than $50 per night. However, a woman traveling to get a legal abortion can also deduct lodging expenses for a person traveling with her. For example, if a woman's partner is traveling with her, up to $100 per night can be deducted for lodging.
Meals while traveling aren't deductible unless they're part of the inpatient care at a hospital or similar medical facility.
Can You Still use HSA, FSA, or HRA Funds to Pay for an Abortion?
Millions of Americans use health savings accounts (HSAs), flexible spending accounts (FSAs), and Health Reimbursement Arrangements (HRAs) to pay for medical expenses. There are several tax advantages that go along with these accounts – such as tax-free withdrawals if the money is used to pay for qualified medical expenses.
The definition of a qualified medical expense for HSA, FSA, and HRA purposes is the same as the definition for purposes of the medical expense deduction. As a result, tax-free payments from HSAs, FSAs, and HRAs are only allowed for legal abortions. And, as discussed above, that's now going to depend on state law.
Transportation and lodging expenses (up to $50 per person for lodging) can also be paid for with HSA, FSA, or HRA funds. So, women traveling from a state that doesn't allow abortions to one that does can still take advantage of tax-free withdraws from these accounts to pay for abortion-related travel expenses.
Will You Have Taxable Income if Your Employer Covers Your Travel to Another State for an Abortion?
Since the Supreme Court invalidated Roe v. Wade, many businesses across the country have promised to cover travel expenses for employees who go to another state to get a legal abortion. However, depending on how this is implemented, the employee could end up with additional taxable income.
If abortion-related travel expenses are covered by the employer's health insurance plan, then the employee would only be taxed on any amount that exceeds the limits on qualified medical expenses for purposes of the medical expense deduction. So, for example, any hotel expense greater than $50 per night per person that's covered by the employer's health plan could be treated as taxable income for the employee. Covered automobile transportation expenses that are greater than the actual travel costs or the medical standard mileage rate could also be treated as taxable income.
There may be limits on an employer's ability to cover travel expenses through its health plan, though. Several states currently restrict coverage for abortion-related expenses, and more states could join the list. Plus, covering abortion-related travel costs through a workplace insurance plan only helps workers who are eligible for and actually enrolled in the plan – which means some female employees will be left without the intended benefits. As a result, some employers might try to cover their employees' abortion-related travel costs by simply reimbursing workers for their expenses (likely requiring receipts from the employee to substantiate the amount). While the limits associated with coverage through a health care plan wouldn't necessarily apply, the reimbursed amount would be treated as taxable income for the employee.
Having taxable income shouldn't necessarily dissuade an employee from taking advantage of a reimbursement plan, but she should realize in advance that it could increase her income tax bill.
Can You Deduct Donations to Pro- or Anti-Abortion Organizations?
The Supreme Court certainly reignited the abortion debate when it overturned Roe v. Wade. For years to come, there will be intense efforts to persuade lawmakers across the country to either protect abortion options or eliminate them – especially at the state level. Individuals will surely reach out to their own representatives to voice their opinions, but most of the concentrated pressure will come from organizations set up to advocate and lobby for one side or the other. And, of course, those organizations will need money – much of which will come from contributions by ordinary Americans.
But will individual donations to the advocacy organizations still qualify for a charitable tax deduction now that Roe v. Wade was reversed? Yes. As long as the IRS authorizes the organization to accept deductible donations and you satisfy all the deduction's other requirements (including that you itemize deductions on your tax return), then you can still write-off your donations to these groups. The fact that a constitutional right to an abortion is no longer recognized doesn't change how the deduction works or who can claim it.
Tax Tip: Use the IRS's online Tax Exempt Organization Search tool to see if an organization is eligible to receive tax-deductible donations.
State Tax Changes After Roe v. Wade
Keep an eye out for state tax law changes where you live, too. For example, since Roe v. Wade was overturned, the Georgia Department of Revenue announced that it will recognize any unborn child with a detectable human heartbeat as eligible for the state's dependent exemption. That exemption is equal to $3,000 for each unborn child.
Other states may provide other tax breaks for unborn children, pregnant women, or others as a result of the Supreme Court's action.