Paul L. Caron

Tuesday, May 28, 2024

When Gender-Affirming Healthcare Becomes Illegal, Will It (Still) Be Tax-Deductible?

Diane Kemker (Southern; Google Scholar), When Gender-Affirming Healthcare Becomes Illegal, Will It (Still) Be Tax-Deductible?, 25 Geo. J. Gender & L. 83 (2023):

Georgetown j of gender and the lawMore than twenty states currently limit or ban access to gender-affirming medical and surgical care for minors, and three more have bans that went into effect on January 1, 2024. For many transgender youths and their families, this will mean crossing state lines to obtain appropriate medical care and make this often-costly care even more expensive. This situation is not only a crisis for the civil rights of trans people; it also presents an undecided issue of federal income tax law. Since 2011, when the IRS acquiesced in O’Donnabhain v. Commissioner, the tax-deductibility of at least some gender-affirming healthcare has seemed secure. But a situation in which medical care deemed deductible for federal income tax purposes is illegal under the state law of the taxpayer’s residence is unprecedented. 

The Internal Revenue Code and its Regulations do not address this possibility. Section 213 of the Internal Revenue Code, which permits taxpayers to take a federal income tax deduction for unusually large medical expenses, does not condition deductibility on the legality of the medical treatment, but the current Regulations do. These Regulations must be amended to clarify that so long as gender-affirming care is lawful where provided, the associated expenses are tax deductible, regardless of their status under the state law of the taxpayer’s residence.

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