On May 2, 2025, the IRS released a determination letter (Letter Ruling 202518023) that sheds light on how medical expense deductions under Sec. 213 apply to assisted reproductive technologies. This guidance is especially important for taxpayers navigating the complex rules around in vitro fertilization (IVF) and gestational surrogacy.

IVF vs. Surrogacy: What’s Deductible?

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The IRS ruling makes a clear distinction:

IVF-related expenses — fertility treatments, sperm and egg retrieval, and related medical procedures — may qualify as deductible medical expenses if they meet Sec. 213 thresholds. This deduction, if applicable, will apply to the taxpayer, the taxpayer's spouse or a dependent provided the "medical expense" exceeds 7.5% of the taxpayer's adjusted gross income.  What constitutes a medical expense is defined by the tax code and can be discussed with your tax professional.

Surrogacy-related expenses — including medical care, insurance, and compensation for a gestational surrogate — are not deductible.

Why Documentation Matters

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Taxpayers pursuing IVF or surrogacy should keep detailed records of each expense to substantiate claims. Proper documentation helps avoid IRS disputes and ensures compliance with deduction rules.

Consult the Experts

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Because medical deductions can be nuanced, working with a tax professional is essential. Advisers can help distinguish between personal medical care expenses that qualify and third-party costs that do not.

Key Takeaway

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This ruling provides much-needed clarity: IVF expenses may be deductible, but surrogacy costs are excluded. Taxpayers considering assisted reproductive technologies should carefully evaluate their eligibility under Sec. 213 and seek professional guidance to maximize deductions while staying aligned with IRS rules.

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