Direct surrogacy tax deductions are restricted, but intended parents can often deduct IVF costs.
You can use these IVF tax write-offs to reduce your taxable income and redirect those recovered savings to help fund your surrogacy journey.
Reach out to a surrogacy specialist today to receive a cost estimate and discover how tax savings can help fund your surrogacy.
In this guide, we’ll explore the recent IRS rulings, identify which fertility expenses qualify for deductions, and show you how to maximize your budget while building your family.
Understanding the IRS Ruling: Are Surrogacy Expenses Tax Deductible?
No, direct surrogacy costs like agency fees and surrogate compensation are not tax deductible.
A recent IRS Letter Ruling has clarified the boundaries of the surrogacy tax deduction for intended parents.
While the IRS approves medical deductions for fertility procedures performed on the tax payer (in this case, the intended parents), it continues to deny deductions for costs tied directly to the surrogate’s medical care.
The legal distinction relies on the requirement that deductible medical expenses must “affect the structure or function” of the taxpayer’s own body.
Because a gestational carrier is a third party, her medical insurance, legal fees, and pregnancy-related care are currently considered non-deductible by the IRS, even if the surrogacy is medically necessary.
Learn more about IVF tax write-offs.
What IVF Costs Count as Tax Deductible?
To be deductible, costs must be incurred for treatments performed on the taxpayer, their spouse, or a dependent.
The following IVF-related costs generally qualify as tax-deductible medical expenses
- Fertility medications and laboratory fees.
- Procurement of donor eggs and sperm.
- Medical procedures for egg retrieval and embryo creation.
- Storage fees for embryos, when tied to immediate medical necessity.
How to Use IVF Deductions to Offset Surrogacy Costs
A tax deduction saves you money by lowering your taxable income, which indirectly reduces the total amount of tax you owe to the government.
Although surrogacy is ineligible for a direct tax deduction, the IVF portion of your journey remains a viable medical expense.
By strategically applying these deductible costs, you can reduce your overall taxable income and reallocate those saved funds toward other areas of your surrogacy journey.
Learn more about surrogacy costs.
Calculating Your IVF Tax Deduction
You can only subtract medical costs from your taxes after they exceed 7.5% of your total yearly income (your AGI).
Any money you spend on medical care below that amount doesn’t count for a deduction.
To calculate your potential tax savings, you must first determine which expenses are qualified and then apply the IRS threshold for medical deductions.
Example calculation:
- Your Adjusted Gross Income: $100,000
- 7.5% of that: 100,000 x 0.075 = $7,500
- Your IVF Costs: $20,000
After you subtract the $7,500 threshold from your total IVF costs, you are left with a $12,500 tax deduction. This remaining amount is what you actually get to subtract from your taxable income to help fund your surrogacy.
Why You Should Consult a Tax Professional About IVF Tax Deductions for the 2025 Tax Year
IRS rules regarding reproductive health are nuanced and subject to change.
A knowledgeable advisor can help assess how expenses should be categorized, evaluate eligibility for applicable credits or deductions, and ensure compliance with current IRS rules.
This is especially important if you are considering requesting a private letter ruling, which requires precise factual framing, technical tax analysis, and careful documentation.
Professional guidance can help minimize risk while ensuring you take full advantage of any tax benefits that may be available based on your specific circumstances.
Have Questions About Surrogacy Costs? We’re Here to Help
Our specialists are here to provide the cost transparency and personalized guidance you need to turn your tax savings into a viable plan for parenthood.
Reach out to a surrogacy specialist today to get a clear breakdown of your costs and how to leverage your tax savings.