Cryopreservation storage fees are deductible on your federal taxes only when the storage supports current medical treatment, and even then only the amount above 7.5% of your adjusted gross income counts, and only if you itemize. Fertility preservation tied to an active effort to have children or to upcoming cancer treatment generally qualifies. Precautionary cord blood banking for a healthy child generally does not. Whether a deduction actually reduces what you owe depends on math that leaves many taxpayers with nothing to claim.
The Two Thresholds Before Any Deduction Exists
Internal Revenue Code Section 213 lets you deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses The statute defines medical care as amounts paid to diagnose, cure, treat, or prevent disease, or to affect any structure or function of the body. That last phrase is what pulls cryopreservation into the conversation, because freezing reproductive material preserves biological function rather than treating an illness directly.
The 7.5% floor is a real barrier. If your AGI is $100,000, only medical costs above $7,500 produce any deduction.2Internal Revenue Service. Topic No. 502, Medical and Dental Expenses And the deduction is available only if you itemize on Schedule A rather than take the standard deduction. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.3Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Your total itemized deductions — medical costs, state and local taxes, mortgage interest, charitable gifts — need to exceed that number before itemizing saves you anything.
Run the numbers. A couple with a combined AGI of $150,000 paying $3,000 a year in embryo storage needs more than $11,250 in total medical expenses before storage fees start producing a deduction, and their combined itemized deductions still have to top $32,200 for itemizing to beat the standard deduction. For many households paying only annual storage fees, the honest answer is that the deduction exists on paper and delivers nothing on the return.
Fertility Preservation and Embryo Storage
IRS Publication 502 lists “temporary storage of eggs or sperm” as a deductible medical expense when the storage is part of a procedure to overcome an inability to have children.4Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses Two conditions sit inside that language: the storage must be temporary, and it must connect to an active effort to conceive.
IVF-related costs — egg retrieval, fertility medications, sperm collection, the fertilization procedure — are generally deductible when performed on the taxpayer or spouse. The IRS has confirmed in a private letter ruling that these expenses “directly affect the structures or functions of the taxpayers’ bodies” and satisfy Section 213.5Internal Revenue Service. Private Letter Ruling 202114001 Storage during an active cycle falls comfortably within that framework.
The gray area is long-term storage without an immediate treatment plan. Publication 502 uses “temporary” without defining a timeframe, and taxpayers pay annual storage fees for years while postponing a transfer. If the delay is documented and medical — a planned staged treatment, a diagnosed condition that must be managed first — you have a reasonable position. If the storage is purely elective, with no diagnosed fertility issue and no timeline for use, the connection to current medical care is thin.
Surrogacy and Donor Procedures Are Out
When IVF procedures are performed on a third party rather than on you or your spouse, the IRS treats those costs as non-deductible. In PLR 202114001, the IRS allowed a deduction for the taxpayers’ own sperm freezing but denied deductions for egg retrieval from a donor, IVF costs for a surrogate, and all surrogacy-related medical fees.5Internal Revenue Service. Private Letter Ruling 202114001 Expenses affecting someone else’s body are not medical care for you under Section 213.
Insurance and Employer Benefits Reduce What You Can Claim
Section 213 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 If your employer’s fertility benefit reimburses $5,000 of a $12,000 egg freezing cycle, only the $7,000 you paid enters the calculation. The same applies to insurance payouts. As more states mandate fertility preservation coverage, the out-of-pocket portion eligible for deduction shrinks.
Preservation Before Cancer Treatment
Patients about to undergo chemotherapy, radiation, or surgery that may cause infertility have the strongest case for deducting cryopreservation costs. When a physician recommends egg or sperm freezing before a procedure that threatens reproductive function, the preservation directly addresses a diagnosed condition and its treatment side effects. That fits Section 213’s language about affecting a structure or function of the body, and arguably about preventing disease, because the procedure prevents the permanent loss of fertility that would otherwise follow.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
The IRS has not issued a revenue ruling specifically on pre-chemotherapy preservation, but the logic tracks existing guidance. Publication 502 allows deductions for procedures to “overcome an inability to have children,” and a cancer patient preserving eggs before treatment that will cause infertility is doing exactly that.4Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses Congress has considered separate relief for this situation. H.R. 4639, the Infertility Treatment Affordability Act of 2025, would create a tax credit for fertility preservation before medical procedures that may cause involuntary infertility, without requiring an existing infertility diagnosis.6U.S. Congress. H.R. 4639 – Infertility Treatment Affordability Act of 2025 As of mid-2025, the bill has not been enacted.
Cord Blood and Stem Cell Storage
The IRS applies stricter scrutiny here. Collecting and storing a healthy newborn’s cord blood as a precaution against diseases that might develop someday does not qualify as a medical expense. The general standard requires that the disease being addressed is existing or imminently probable, not merely possible.4Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses
Storage becomes deductible when it directly relates to treating a family member who already has a condition treatable with the specific stem cells being preserved. If a sibling has leukemia and the newborn’s cord blood is collected for a planned transplant, the expense addresses a current medical need. A doctor’s recommendation for precautionary banking does not override the requirement that the expense connect to an identified health threat.
Transportation for shipping cryopreserved materials may also be deductible if the transport is essential to qualifying medical care. Publication 502 allows deductions for transportation “primarily for and essential to medical care,” which can cover shipping fees when the material is part of active treatment.4Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses Shipping cord blood to a research bank with no treatment plan does not meet that standard.
Paying Storage Fees Through an HSA or FSA
If itemizing does not work for your return, a Health Savings Account or Flexible Spending Account offers an alternative route. Both define qualified medical expenses by reference to Section 213(d) — the same definition that governs the itemized deduction.7Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts The substantive rules carry over: storage tied to fertility treatment qualifies, speculative cord blood banking for a healthy child does not.
The practical advantage is that HSA and FSA reimbursements reduce your taxable income without requiring you to clear the 7.5% floor or exceed the standard deduction. For someone paying $600 to $1,000 a year in storage fees, an HSA or FSA is usually the more efficient vehicle.
You cannot pay for the same expense from an HSA or FSA and also claim it on Schedule A. Expenses reimbursed from an HSA are not medical expenses for purposes of the Section 213 deduction, and your account records must show that reimbursed expenses were not taken as itemized deductions in any year.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
Documentation to Have on Hand
If the IRS questions the deduction, the burden falls on you. Collect this before filing:
- Itemized receipts from the storage provider showing the provider’s name and address, date of payment, and a description of the services (collection, processing, annual storage).
- A physician letter of medical necessity. For fertility preservation, the letter should identify the medical reason: an infertility diagnosis, upcoming chemotherapy, or a specific reproductive condition. For stem cell storage, it should name the existing condition and explain why the stored material is needed for treatment.
- Insurance explanations of benefits showing what was reimbursed by insurance or by an employer fertility benefit, so you deduct only the unreimbursed amount.
The IRS does not publish a mandatory template for letters of medical necessity, but the pattern across Publication 502 is consistent: a physician must connect the expense to a specific diagnosed condition, and the expense must be necessary for treatment rather than merely beneficial to general health.4Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses A vague letter saying storage “may be useful someday” will not hold up. The letter should name the diagnosis, explain the treatment plan, and state why cryopreservation is a medically necessary component. Keep everything for at least three years after filing.8Internal Revenue Service. How Long Should I Keep Records
What Happens If the Deduction Gets Disallowed
Claiming a deduction the IRS later disallows means paying the tax originally owed plus potential penalties. The accuracy-related penalty adds 20% of the underpaid amount if the IRS finds you were negligent or substantially understated your income tax.9Internal Revenue Service. Accuracy-Related Penalty For individuals, a substantial understatement means your tax liability was understated by the greater of 10% of the correct tax or $5,000.
If your position sits in a gray area, such as long-term embryo storage without a clear treatment timeline, you can file Form 8275 (Disclosure Statement) with your return to flag it. Adequate disclosure on Form 8275 can protect you from the negligence and substantial understatement penalties, provided your position has a “reasonable basis,” which the IRS describes as a standard “significantly higher than not frivolous.”10Internal Revenue Service. Instructions for Form 8275 (Disclosure Statement) Disclosure will not rescue a claim with no legal foundation, but for genuinely ambiguous situations it is a reasonable safeguard. The IRS may also waive or reduce penalties if you can show reasonable cause and good faith, and a strong physician letter with consistent documentation helps that case.