Hawley Wants a New Health Care Tax Break. Here’s What CPAs Should Watch For

Why This Bill Matters to CPAs

Right now medical deductions are a niche benefit. Only itemizers qualify, and only the portion above 7.5 percent of AGI counts. Most clients never see the deduction.

Hawley’s bill nukes that barrier.
Every taxpayer would get access.
Standard deduction filers included.
Out of pocket premiums included.
Up to twenty five thousand dollars per person.

That suddenly turns medical expenses into one of the biggest potential deductions on the entire return.

The Real Accounting Impact

If this passes, CPAs would be dealing with
• new deduction projections
• detailed medical expense documentation for every client, not just itemizers
• new conversations around HSA vs deduction optimization
• major shifts in AGI management strategy
• higher value in year end health care timing

This is not a small tweak. It changes how millions of clients would time spending, pay premiums, choose surgeries and shop for insurance.

The Tax Planning Angle

This creates a massive incentive to “bunch” medical expenses.
A forty thousand dollar surgery.
A family’s annual premiums.
Dental work.
Orthodontics.
Long term prescriptions.

Under current rules, most of that gets ignored.
Under Hawley’s plan, a family of four could theoretically deduct up to one hundred thousand dollars.

That’s a planning tool CPAs can’t ignore.

Where Politics Comes In

Hawley is positioning this as the GOP’s affordability fix heading into the election year. He even floated it to Trump, pitching it with the same simplicity as “no taxes on tips.”

Trump reportedly liked it.

The timing matters.
The Senate is about to vote on expiring Obamacare subsidies.
Republicans need an alternative.
Hawley is offering a fallback option they can pitch to voters as an immediate benefit.

Would This Replace ACA Subsidies

Not entirely.
But Hawley claims it gets “close” if structured correctly.

Translation for CPAs
Expect clients to ask whether a deduction is better than a subsidy.
You’d be running scenarios for both.

What CPAs Should Prepare For

Even if this bill doesn’t survive intact, the conversation is shifting.
Medical deductions are back in play.

CPAs should prep for
• clients asking about “twenty five thousand dollar deductions”
• premium deduction scenarios
• married filing jointly optimization
• health care expense timing strategies
• new documentation workflows

If this becomes law, it will change interviews, organizers, and tax planning conversations instantly.

FAQ

Does the twenty five thousand dollar deduction stack with the standard deduction
Yes. That’s the entire hook of the bill.

Do itemizers still have the 7.5 percent AGI rule
No. Hawley’s plan bypasses that for everyone.

Are premiums included
Yes. Out of pocket premium costs would be deductible.

Is this likely to pass
Hard to say. But it has the political simplicity lawmakers love in an election year.

Summary

Hawley’s proposal would turn medical deductions from a niche itemizer benefit into a massive, mainstream tax planning tool. It simplifies the pitch for voters but creates a huge shift in how CPAs approach AGI strategy, year end planning and client documentation.