Technical Advisory Committee on Tax Measures for Persons with Disabilities
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Disability-Related Federal Personal Income Tax Measures
Medical Expense Tax Credit
The medical expense tax credit
(METC) recognizes the effect of above-average disability-related and medical
expenses on an individual’s ability to pay tax. For 2005, the credit
equals 16 percent of qualifying expenses in excess of the lesser of $1,844
and 3 percent of net income. The net income threshold is used to determine
above-average expenses and it is fully indexed to inflation. There is no upper
limit on the amount of eligible expenses that may be claimed.
The list of eligible disability-related and medical expenses is regularly
reviewed and expanded in light of new technologies and other disability-specific
or medically related items.
Taxpayers may claim the medical expenses that they or their spouses incur.
The 2004 budget proposed to allow caregivers to claim more of the medical
and disability-related expenses they incur on behalf of dependent relatives.
Specifically, for medical expenses paid on behalf of dependent relatives,
such as a grandparent, niece or nephew, taxpayers will be able to claim qualifying
medical expenses that exceed the lesser of 3 percent of the dependant’s
net income and $1,844 (for 2005). Based on 2004 budget proposals, the maximum
eligible amount that can be claimed on behalf of dependent relatives will
be $5,000.