Egg donor fees and related expenses can be tax deductible, but only when the donation is part of treating a diagnosed medical condition that keeps you or your spouse from having children, and only for the portion of qualifying medical costs that exceeds 7.5% of your adjusted gross income in a year you itemize. If your own reproductive system functions normally and you are using donor eggs for other reasons, the IRS’s recent position is that the costs are not deductible at all. With a donor egg cycle running $18,000 to $35,000 or more, which side of that line you fall on matters.
When Egg Donor Costs Qualify as Medical Care
Federal law lets you deduct unreimbursed medical expenses paid to diagnose, treat, or prevent disease, or to affect a structure or function of the body.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses IRS Publication 502 applies that rule to fertility by allowing the cost of procedures “performed on yourself, your spouse, or your dependent to overcome an inability to have children,” and it lists in vitro fertilization as an example.2Internal Revenue Service. Publication 502 – Medical and Dental Expenses
Two conditions have to be met. The procedure has to be performed on the taxpayer, spouse, or dependent, and it has to address an actual inability to have children. The clearest case: a woman with a diagnosed condition such as premature ovarian failure who cannot produce viable eggs, whose doctor prescribes donor-egg IVF, and who undergoes the embryo transfer and related treatment on her own body. The IVF performed on her plainly counts.
Whether the upstream donor costs (donor compensation, agency fees, the donor’s screening, the donor’s retrieval, legal fees for the donor contract) also count is less settled. A 2003 IRS private letter ruling treated those costs as part of the intended parent’s medical care under Section 213, and many tax professionals still rely on that reasoning. Private letter rulings apply only to the taxpayer who requested them and cannot be cited as precedent, so your facts would be judged on their own.
When Egg Donor Costs Are Not Deductible
The IRS has taken a harder line in more recent guidance. A 2021 private letter ruling concluded that expenses for egg donation, IVF procedures performed on third parties, and gestational surrogacy are not deductible because they are “not incurred for treatment of disease nor are they for the purpose of affecting any structure or function of taxpayers’ bodies.”3Internal Revenue Service. Private Letter Ruling 202114001 A 2025 ruling reached the same conclusion, treating egg donor costs, egg retrieval, IVF medical costs, legal and agency fees, and surrogate-related expenses as non-deductible when the assisted reproductive procedures are not being performed on the taxpayer.4Internal Revenue Service. Private Letter Ruling 202505002 Tax Court and appellate decisions between 2008 and 2017 reached the same result: if the taxpayer has no medical condition causing infertility, third-party reproduction costs don’t treat or affect any structure or function of that taxpayer’s body within the meaning of Section 213(d).
In both the rulings and the court decisions, the only costs the IRS allowed for a taxpayer without a fertility diagnosis were procedures performed on that taxpayer’s own body, such as sperm donation and sperm freezing for a male intended parent.
Surrogacy Is Separately Excluded
If your arrangement also involves a gestational carrier, Publication 502 removes any ambiguity. You cannot include amounts paid for “the identification, retention, compensation, and medical care of a gestational surrogate” because those payments go to someone who is not you, your spouse, or your dependent.2Internal Revenue Service. Publication 502 – Medical and Dental Expenses That exclusion covers the surrogate’s medical bills, maternity insurance, legal fees for the surrogacy agreement, and the surrogate’s compensation, and it applies regardless of the intended parents’ own medical condition.
Which Specific Costs Are Includable
When the deduction is available because the donor cycle is part of treating the intended parent’s diagnosed infertility, the range of includable costs is fairly broad:
- Donor compensation paid for undergoing the retrieval cycle.
- Agency matching and coordination fees.
- Medical screening of the donor: blood work, genetic testing, ultrasounds, and other clinical evaluations.
- Psychological evaluation of the donor when required.
- Legal fees for drafting and executing the egg donor agreement.
- Short-term insurance purchased for the donor to cover complications from retrieval.
- Travel costs for the donor when travel is essential to receiving care at a licensed medical facility, plus lodging up to $50 per night.
- IVF, embryo creation, storage, and transfer performed on the intended parent.
Costs that never qualify include elective gender selection for non-medical reasons, fees to select donor traits unrelated to health screening, and any portion of the expenses reimbursed by insurance. The statute limits the deduction to amounts “not compensated for by insurance or otherwise.”1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
The 7.5% AGI Floor and Whether Itemizing Helps
Even qualifying medical expenses are only deductible above 7.5% of your adjusted gross income.5Internal Revenue Service. Topic No. 502 – Medical and Dental Expenses At an AGI of $100,000, the first $7,500 of medical spending produces no benefit. Spend $30,000 on a donor cycle, and $22,500 is potentially deductible.
You then need itemized deductions to beat the standard deduction. For tax year 2026, the standard deduction is $16,100 for single filers and $32,200 for joint filers.6Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026, Including Amendments From the One, Big, Beautiful Bill Your post-floor medical expenses plus other itemizable items (state and local taxes, mortgage interest, charitable contributions) have to exceed that number before itemizing saves anything.
A worked example. A married couple filing jointly with AGI of $120,000 pays $30,000 in qualifying egg donor and IVF costs, with no insurance reimbursement. Their 7.5% floor is $9,000, leaving $21,000 in deductible medical expenses. Add $14,000 in state taxes and mortgage interest and their itemized total is $35,000, which is $2,800 above the $32,200 standard deduction. At a 22% marginal rate, that’s about $616 in federal tax savings from the medical portion. The savings grow as costs rise or AGI falls.
Because the 7.5% test is annual, timing matters. Consolidating consultations, screening, and the retrieval cycle into a single tax year is often the difference between clearing the floor by a meaningful amount and barely crossing it.
Paying With HSA or FSA Funds
Health Savings Accounts and Flexible Spending Accounts use the same Section 213(d) definition of medical care, so an expense that qualifies for the itemized deduction generally qualifies for HSA or FSA reimbursement. The same threshold question applies: the expenses have to be for treating the account holder’s, spouse’s, or dependent’s medical condition.
Most administrators require a Letter of Medical Necessity from your doctor before they will reimburse fertility-related costs. The letter should explain the diagnosed condition and why donor eggs are medically necessary to treat it. Without it, the claim is likely to be denied.
You cannot use both tax benefits on the same dollar. Expenses paid with pre-tax HSA or FSA funds cannot also be claimed on Schedule A. When total fertility costs are large, splitting them (some paid from a tax-advantaged account, some out of pocket toward the itemized deduction) can produce a better result than routing everything through one channel. A tax advisor can model the allocation for your income and filing status.
Documentation to Keep
If you claim these costs, the burden of proof is yours. Keep:
- Medical records showing the diagnosis of the underlying fertility condition and the physician’s recommendation for donor-egg IVF. This is the single most important document because it establishes the medical connection the IRS looks for.
- Itemized clinic invoices showing dates, procedures, and amounts, with costs on the intended parent separated from costs on the donor.
- Agency statements breaking out matching fees, donor compensation, and screening costs.
- Attorney invoices for the egg donor agreement.
- Receipts for donor travel and lodging, with mileage logs where applicable.
- Proof of any insurance reimbursements, which must be subtracted from your total.
You claim the deduction on Schedule A with your Form 1040. Receipts don’t get attached, but you must be able to produce them on request. Keep records at least three years from the date you file or two years from the date you paid the tax, whichever is later.7Internal Revenue Service. How Long Should I Keep Records Given the size of a donor cycle and the direction of recent IRS guidance, six or seven years is a more comfortable window.