The PAW Act of 2025 amends the Internal Revenue Code to allow taxpayers to treat certain veterinary care costs, including pet health insurance and care for service animals, as medical care expenses.
Claudia Tenney
Representative
NY-24
The "People and Animals Well-being Act of 2025" allows taxpayers to use certain veterinary care costs as medical care expenses. Specifically, it allows costs for service animal care and pet health insurance to be considered medical expenses. Additionally, it allows up to $1,000 in veterinary care expenses and $1,000 for pet health insurance for a taxpayer's pet to be considered medical expenses. This limit will be adjusted for inflation starting in 2026.
New Tax Break for Pet Owners: PAW Act Treats Vet Bills as Medical Expenses Starting Now
The "People and Animals Well-being Act of 2025," or PAW Act, just changed the tax game for pet owners. This bill amends section 213(d) of the Internal Revenue Code, letting you count some of those vet bills as medical expenses. That means a potential tax deduction, putting some money back in your pocket.
Vet Bills = Medical Expenses?
The PAW Act splits this into two main categories:
- Service Animals: If you, your spouse, or a dependent relies on a service animal (as defined by federal regulations - 28 CFR 36.104), all veterinary costs and pet health insurance for that animal are now considered medical expenses. No cap.
- Other Pets: For your regular, everyday pets (defined under the Agriculture Improvement Act of 2018, section 12502(b)(9)(D)), things get a little more limited. You can treat up to $1,000 in veterinary care and up to $1,000 in pet health insurance as medical expenses. So, potentially $2,000 total.
"Veterinary care" covers a wide range, from check-ups and shots to surgery and prescription food, as long as it's approved by a vet for diagnosing, treating, or preventing illness or injury. (SEC. 2)
Real-World Impact
Imagine you're a freelancer with a hefty vet bill for your dog's unexpected surgery. Under the PAW Act, you could potentially deduct up to $1,000 of that cost, lowering your taxable income. Or, if you have a service dog that helps you manage a disability, all of their vet care and insurance costs are now deductible. For someone on a fixed income, that could be a significant help.
The Fine Print & Future-Proofing
That $1,000 limit? It's not set in stone. Starting in 2026, the amount will be adjusted for inflation, rounded to the nearest $50. (SEC. 2) This means the deductible amount should keep pace with rising costs over time.
This change applies to expenses paid after the enactment of the Act. So, keep those receipts!
Challenges?
While this is generally good news for pet owners, there's always the practical side. People might try to stretch the definition of "service animal" or inflate their vet bills. The IRS will likely need to provide clear guidelines to prevent misuse. But, overall, the PAW Act acknowledges the important role pets play in our lives and offers a tangible financial benefit to those who care for them.