It’s widely understood that treatment for infertility such as IVF or artificial insemination and pregnancy expenses are deductible medical expenses under U.S. Code section 213. A question intended parents have asked us as their surrogacy lawyer, if infertility and pregnancy treatments are deductible, what about medical expenses or costs incurred in surrogacy or egg donation, as these are also treatments for infertility?
The 2021 Private Letter Ruling
The answer whether expenses for third party reproduction can be considered medical expenses and written off on an intended parents’ taxes appears to be “no.” This answer is based off on April 9, 2021 Private Letter Ruling of the Internal Revenue Services (IRS) where a gay male couple requested a ruling to allow them to deduct for costs and fees related to medical expenses directly attributable to one or both of them, for egg retrieval from an egg donor, in vitro fertilization (“IVF”), with a surrogate, childbirth expenses attributable to the surrogate, medical insurance for the surrogate, legal and agency fees related to the egg donation and surrogacy, and any other medical expenses arising from the surrogacy.
The IRS in its Private Letter Ruling held that costs and fees related to egg donation, IVF procedures, and gestational surrogacy do not qualify as deductible medical expenses. The IRS stated that the costs and fees directly attributable to medical care for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body of the taxpayer, the taxpayer’s spouse, or taxpayer’s dependent qualify as eligible medical expenses. However, expenses incurred on behalf of third parties (not the spouse or dependent), which occur during egg donation, the IVF procedures, and gestational surrogacy are not incurred for treatment of disease nor are they for the purpose of affecting any structure or function of taxpayers’ bodies.
Only the sperm retrieval and sperm freezing could be deductible since there were for medical care that was actually performed on one of the taxpayers' intended parents for the treatment of a disease. This ruling is in line with previous case law which found that only infertility treatments performed on the body of the person claiming a medical expense (and not a third party such as a donor or surrogate) fall under the definition of medical expense.
The 2025 Private Letter Ruling
On January 31, 2025, the IRS released a new Private Letter Ruling, this time addressing the question whether a heterosexual married couple with a diagnosis similar to infertility could deduct third party reproduction expenses. The couple had an egg donor and a surrogate and requested a ruling to deduct the egg donor related costs, medical expenses of sperm retrieval, sperm freezing, IVF medical costs, surrogate medical insurance costs, childbirth expenses, legal and agency fees, and other medical expenses arising from surrogacy. The IRS noted that the use of assisted reproductive technology did not directly and literally affect the structure or function of the intended mother’s body but will instead affected the structure or function of the surrogate. It also held that medical expenses were not deductible as they do not meet the basic requirement of U.S. Code section 213(a)(1). Like the 2021 Private Letter Ruling, the IRS found that only the care directly attributable (i.e., sperm retrieval) to the taxpayers was subject to deduction under Section 213.
Conclusion
The rulings of the IRS make clear that it interprets the IRS tax code to require a taxpayer to show that the expenses qualify as “medical care” for the taxpayer or his or her spouse or dependent. Unfortunately, this decision seems to treat individuals suffering infertility differently. If a man and woman can have IVF expenses considered medical expenses, should it no longer be a qualified medical expense if the man or woman uses a donor gamete when they perform IVF? It should be noted that these private letter rulings are not precedential, the decisions only affect the parties requesting them, so the IRS could be asked in the future and have a different ruling. Likewise, a denial could be appealed to the tax court which might rule differently.
Read more about the deductibility of third party reproduction related expenses in our blog on egg donation expenses here. The outcome is strikingly different, and the latest 2025 ruling appears to contradict the ruling.
As you embark on your journey, whether you are considering surrogacy or egg donation as an intended parent, or as a potential surrogate or egg donor, consulting with a surrogacy lawyer is a good place to start.
As Fellows of the Academy of Adoption & Assisted Reproduction Attorneys (AAAA) and the Academy of California Adoption-ART Lawyers (ACAL), Tsong Law Group brings extensive expertise to the practice of surrogacy law. Our award-winning lawyers are licensed in California, New York, Illinois, Washington, Oklahoma, and Arizona.
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This article is for informational purposes only and should not be relied upon without additional research or consulting an attorney. This article is not legal advice and does not create an attorney-client relationship with the reader.