Smartwatch tax breaks depend on why clients buy and use them

In a February 2026 Pew Research Center survey, 37% of U.S. adults said they owned a smartwatch. That's a lot of potential client questions about whether the cost qualifies as a medical expense. The determination depends less on what the watch can measure than on why the client bought it and how the information is used.

In FAQ Q15, added Sept. 23, 2026, the IRS applies the familiar §213 medical-expense rules to watches, rings, patches and other wearables. Section 213 governs itemized medical expense deductions, while subsection (d) defines what qualifies as medical care. It's a useful example of a broader distinction: Something that promotes good health is not necessarily medically deductible for tax purposes.

What is the device's main purpose?

Under §213(d), medical care includes amounts paid for the diagnosis, cure, treatment, mitigation or prevention of disease. A wearable that tracks steps or oxygen saturation does not qualify simply because those readings relate to health. The taxpayer must purchase and use it primarily to assist with a specific disease. A device with both personal and medical features isn't automatically disqualified, but general wellness use alone isn't enough.

Consider Paul and Annie, two clients who each have the same smartwatch. Annie uses hers mainly to count steps and track workouts, occasionally checking heart rate readings. She also earns a health insurance premium discount for reaching activity goals that her watch records. Neither the wellness incentive nor the health tracking makes her watch a qualifying medical expense. Paul has arrhythmia and primarily uses his watch to monitor symptoms and share readings with his cardiologist as part of managing his condition. These facts could support medical expense treatment, even though the watch also has nonmedical features.

The IRS looks at the circumstances, not just the product description. A medical practitioner's recommendation can help, especially when clinical findings or risk factors show how the data informs the client's care, but it doesn't settle the question on its own. The same primary purpose standard applies to related accessories and software subscriptions.

How did the client pay for their health wearable?

If the device qualifies as medical care under §213(d), your next question is how the client paid for it. An eligible expense may be paid or reimbursed tax-free through a health savings account (HSA), flexible spending arrangement (FSA) or health reimbursement arrangement (HRA), subject to applicable account and plan rules. An HSA distribution used for a qualified medical expense incurred after the HSA was established doesn't require itemizing deductions.

For an unreimbursed purchase, the client would need to itemize on Schedule A (Form 1040), Itemized Deductions, to claim a medical expense deduction. Only total qualifying unreimbursed medical expenses exceeding 7.5% of adjusted gross income (AGI) are deductible. A device paid or reimbursed tax-free through a health account can’t also be deducted on Schedule A.

Remember, a package labeled “HSA/FSA eligible” is not proof that this particular purchaser meets the medical-purpose test.

Two questions before claiming a wearable

Use these two decisions when a client asks about a wearable device or related subscription.

1. Was it purchased and used primarily for medical care? Identify the specific disease-related purpose and ask how the information is used. A wellness-only purchase stops here as a personal expense. When medical use appears primary, retain the receipt and evidence connecting the device to care, such as a practitioner's instructions or records showing how readings are reviewed.

2. Where can the expense be claimed? Check whether a qualified health account paid or reimbursed the cost. If not, determine whether it belongs with the client's other unreimbursed medical expenses on Schedule A, subject to itemization and the 7.5% floor. As always, don't claim the same expense twice.

Explore NATP's HSA resources

• Scan “What clients don't know about HSAs can cost them” for answers to common HSA questions.
• Dive into the TAXPRO article “Health Savings Accounts | Recognizing the intricacies.”
• View the Handling HSA Contributions and Distributions on-demand webinar for a closer look.
• Attend NATP's 2026 Tax Season Updates workshops for medical expense deductions and HSA changes.