Private Cord Blood Banking Costs Now Tax-Deductible Starting 2025

The newly proposed Family Cord Blood Banking Act is pretty straightforward: it changes the tax code to make the cost of privately banking a newborn’s umbilical cord blood or tissue a deductible medical expense. Think of it this way: if you pay a private company to store that cord blood for future medical use, those fees can now be treated just like other qualified medical costs when you file your federal taxes. This isn’t a small change, and it kicks in for tax years beginning after December 31, 2024. The only major caveat is that the bank you use has to be properly accredited and following the rules laid out in the Public Health Service Act.

The Cost of Saving for Later

For many families, the decision to bank cord blood is a financial calculation. Private banking can involve significant initial collection fees and ongoing annual storage costs, often running into the thousands of dollars over time. This bill, found in Section 2, aims to lighten that load by making those payments tax-deductible. For a busy parent juggling rising childcare and housing costs, getting a tax break on a high-dollar medical decision like this can be a real incentive. It essentially turns a private expense into a subsidized one, reducing the net cost for those who qualify.

Who Actually Gets the Break?

Here’s where the policy meets reality. Since this is a deduction for “medical care expenses,” it primarily benefits taxpayers who itemize their deductions, which is often a feature of higher-income households. If you’re like the majority of Americans who take the standard deduction, this change won’t do much for your bottom line. For example, a family earning enough to itemize and paying $1,500 in annual storage fees could see a noticeable reduction in their taxable income. However, a middle-income family that already uses the standard deduction gets zero benefit from this provision, even if they pay the exact same banking fees. The bill effectively uses the tax code to subsidize a private service, but the benefit is unevenly distributed based on income level and filing status.

The Real-World Impact on Banking

This legislation could boost the private cord blood banking industry by making their service more financially attractive. If more families opt for private banking due to the tax incentive, it increases the overall supply of stored cord blood and tissue, which are rich sources of stem cells used to treat various diseases. The requirement that banks must be accredited (per Section 361 of the Public Health Service Act) is a necessary guardrail, ensuring that the services being subsidized meet established safety and quality standards. Ultimately, the Family Cord Blood Banking Act is a targeted tax incentive designed to encourage a specific, high-cost medical choice, providing relief for those who itemize their taxes while leaving the majority of taxpayers unaffected.