Most core surrogacy costs are not deductible as federal medical expenses simply because they helped you become a parent. IRS Publication 502 for 2025 specifically says that amounts paid to identify, retain, compensate, and provide medical care for a gestational surrogate cannot be included when the surrogate is not you, your spouse, or your dependent.
Some separate medical expenses for care performed on you, your spouse, or your dependent may receive different treatment. A tax professional should classify each payment using the law and IRS guidance for the year you paid it. This article cannot determine what belongs on your return.
Start with the patient named on the invoice
Priya and Sam had one folder called “surrogacy expenses.” It mixed a sperm analysis, donor-program charges, a gestational-carrier agency fee, legal retainers, clinic work, travel, and hospital bills.
Their tax professional did not begin with the folder total. She asked five questions about every payment:
- Who received the money?
- Who was the patient or person receiving the service?
- What exactly was purchased?
- When was it paid?
- Was any part reimbursed by insurance, an employer plan, an HSA, an FSA, or another source?
That approach turned one emotional number into records that could be reviewed under the tax rules.
Organize the Full Surrogacy Budget
What the IRS says about surrogate expenses
Publication 502 now has a section titled “Surrogacy Expenses.” It says taxpayers cannot include amounts paid for the identification, retention, compensation, and medical care of a gestational surrogate when those amounts are paid for an unrelated person who is not the taxpayer, spouse, or dependent.
That language covers several central parts of a typical journey. It also explains why a large invoice labeled “medical” is not automatically the taxpayer’s deductible medical expense. The identity of the patient matters.
Priya and Sam therefore kept surrogate compensation, the matching fee, and bills for the carrier’s medical care in a separate review group. They did not relabel them as fertility treatment performed on Priya or Sam.
Fertility treatment has a separate rule
Publication 502 also discusses fertility enhancement. It says medical expenses can include the cost of certain procedures performed on the taxpayer, spouse, or dependent to overcome an inability to have children. Its examples include in vitro fertilization and temporary storage of eggs or sperm.
This is not a blanket statement that every IVF-related payment is deductible. A surrogacy journey may involve services for several people, plus legal, agency, travel, insurance, storage, and administrative charges. One clinic invoice may even include work tied to different patients.
For Priya and Sam, the sperm analysis was performed on Sam. Other procedures involved an egg donor or the gestational carrier. Their tax professional reviewed those lines separately instead of treating the clinic’s name as the answer.
The Schedule A threshold still applies
IRS Topic 502 explains that a federal medical-expense deduction is an itemized deduction on Schedule A. For the applicable tax year, only eligible unreimbursed medical and dental expenses above 7.5% of adjusted gross income are deductible under the current federal rule.
This means there are at least three gates:
- The payment must qualify as a medical expense under the tax rules.
- It must be for a person whose expenses the taxpayer may include.
- The eligible, unreimbursed total must clear the percentage threshold when the taxpayer itemizes.
An expense can pass the first review and still produce no federal deduction. Your filing status, adjusted gross income, other medical expenses, reimbursements, and choice between the standard deduction and itemizing all matter.
Sort the records into review groups
Use categories, not conclusions. Give the complete list to a qualified tax professional.
| Review group | Examples to place here | Question for the tax professional |
|---|---|---|
| Surrogate-related payments | Matching, retention, compensation, allowances, and the surrogate’s medical care | Does Publication 502’s surrogacy exclusion control each line? |
| Care performed on you or your spouse | Exams, testing, sperm collection, treatment, or storage tied to your own care | Does the service meet the medical-expense definition and fertility rules? |
| Egg-donor and embryo work | Donor screening, retrieval, medication, donor fees, fertilization, culture, and storage | Who received the care, and how should each bundled charge be treated? |
| Legal and agency work | Contracts, parentage, matching, coordination, escrow, and administration | Is any narrow part connected to qualifying medical care, or is it personal or legal spending? |
| Travel and lodging | Trips for testing, retrieval, transfer, pregnancy, or delivery | Does the purpose, traveler, distance, and IRS limit support any treatment? |
| Reimbursed or plan-paid amounts | Insurance, HSA, FSA, HRA, or employer benefits | Was the payment tax-free, and would claiming it create a duplicate tax benefit? |
Do not use the table to self-approve a deduction. It is a document-preparation tool.
See When Surrogacy Payments Are Usually Due
An HSA or FSA is a separate question
People often ask whether an expense can be paid from a health savings account or flexible spending arrangement when it cannot be deducted on Schedule A. The rules overlap, but the account terms and tax consequences need their own review.
IRS Publication 969 explains tax-favored health plans and qualified medical expenses. It also reflects the general rule against deducting an expense that was paid or reimbursed with tax-free health-plan money.
Before using an account card or requesting reimbursement, ask the plan administrator and tax professional for a written answer about the exact service and patient. A fertility clinic, surrogacy agency, or escrow company should not promise that an expense is HSA-eligible.
Records to preserve from the start
Priya and Sam asked providers for itemized statements rather than a single package total. Their file included:
- the payment date and amount;
- payee name and service description;
- patient or service recipient;
- clinic and pharmacy statements;
- donor, surrogate, agency, legal, and escrow invoices;
- insurance explanations of benefits;
- HSA, FSA, HRA, or employer reimbursements;
- travel dates, purpose, traveler, mileage, and receipts; and
- written notes from their tax adviser about uncertain categories.
They also separated payments by calendar year. Medical deductions generally follow the year an expense was paid, not the year the child was born. A tax professional should confirm the timing rule for the payment method and facts.
Questions to take to a tax professional
- Which payments were for medical care performed on me, my spouse, or my dependent?
- How does Publication 502’s surrogacy-expense section apply to our invoices?
- How should bundled clinic and donor-program fees be divided?
- Are any legal, storage, insurance, travel, or lodging costs potentially connected to qualifying care?
- Which amounts were reimbursed or paid with tax-favored funds?
- Would we itemize, and how does the 7.5% threshold affect the result?
- Does our state income-tax treatment differ from the federal treatment?
- What records should we keep if a position requires explanation later?
Map Legal, Insurance, and Financial Roles
Common questions
Can I deduct the surrogate’s medical bills if I paid them?
Publication 502 says amounts paid for a gestational surrogate’s medical care are not included when she is an unrelated person who is not you, your spouse, or your dependent. Ask your tax professional to apply the current-year rule to your facts.
Is IVF tax deductible?
IRS guidance recognizes certain fertility procedures performed on the taxpayer, spouse, or dependent. That does not make every charge in a donor or surrogacy plan deductible. The patient, purpose, timing, reimbursement, and Schedule A rules still matter.
Can a surrogacy agency tell me what to claim?
An agency can provide invoices and payment records. It should not prepare a tax position unless it is separately qualified and engaged to do that work. Use a CPA, enrolled agent, or tax attorney who understands the facts.
Leave the decision with the right professional
The useful question is not “Can I deduct my surrogacy?” as one total. Ask which specific payments qualify, for which person, in which year, under which rule, and after which reimbursements.
LittleBee can organize journey invoices and provider contacts. It does not provide tax advice or decide what appears on a tax return.
Understand How Insurance May Affect a Surrogacy Budget