Can You Deduct CBD Oil From a Tax Return?

Can You Deduct CBD Oil From a Tax Return?

If you make substantial purchases of CBD products, you may wonder if CBD oil is a tax deductible.

Paul James June 10, 2024

The Internal Revenue Service (IRS) doesn’t provide a clear definition for cannabidiol (CBD) and CBD-related products. Therefore, we performed our own research to provide a proper answer.

Unfortunately, this answer isn’t quite proper. In some cases, you can claim CBD as a tax-deductible. However, for most people, CBD will not be tax deductible.

We invite you to follow along as we take a deeper dive into this topic. Keep in mind, we are not tax professionals. If you believe you can claim CBD as a medical expense, you should speak to your tax advisor.

How Does the IRS Allow You to Deduct Medical Expenses?

According to the IRS Publication 502, certain medical expenses can be claimed on Schedule A (Itemized Deductions) of Form 1040. However, you can only deduct the portion of your qualifying medical expenses that exceeds 7.5% of your adjusted gross income (AGI).

For example, if your adjusted gross income is $50,000, you’re only allowed to deduct medical expenses over $3,750 (5.5% of $50,000).

Therefore, unless you’re itemizing deductions or the total of your medical expenses, concerns about a CBD deductible don’t matter. However, if you are itemizing these expenses, you may be curious is CBD qualifies.

What are the IRS’s Rules About Deducting CBD?

According to the IRS, a medical expense is defined as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.”

Alongside this, the IRS has also made a list of what expenses are deductible and not deductible. However, there’s no information on the eligibility of CBD oil. Still, the IRS does provide information on medical marijuana and nutritional supplements.

Medical marijuana is specifically mentioned in the “Controlled Substances” section of the “What Expenses Aren’t Includible?” part of Publication 502. It claims that the cost of medical marijuana cannot be claimed as a medical expense since cannabis remains federally illegal.

There is also a paragraph on “Nutritional Supplements” in the “What Expenses Aren’t Includible” section. It claims that you “can’t include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, ‘natural medicines,’ etc., unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician.”

What are the IRS's Rules About Deducting CBD?

So, Is CBD a Tax Deductible?

Simply put, CBD can be considered a medical expense as long as it was recommended by your doctor for a specific medical condition.

This is thanks to two developments within the CBD industry:

  1. The 2018 Farm Bill federally legalized CBD, ensuring that it doesn’t receive the same classification as medical marijuana.
  2. CBD is now seen as a “nutritional supplement” or “natural medicine,” making it eligible for tax deductions.

Still, the majority of people who take CBD are not receiving a recommendation from their doctors. On top of that, most people don’t have medical expenses exceeding 7.5% of their salary. As a result, in most cases, CBD is not tax deductible.

If you think you’re eligible to write off CBD on this year’s taxes, it’s important to consult a tax advisor.

Is CBD a Tax Deductible in Canada?

If you are a medical marijuana prescriber, the Canada Revenue Agency (CRA) permits you to claim CBD and marijuana for tax deductions as medical expenses. To qualify, you’ll need receipts from a legal and licensed facility.

Paul James

Paul James is a seasoned cannabis and CBD writer and expert. He is a mental health blogger who advocates CBD as a natural alternative to prescription medications. You can read more about this and other natural alternatives on his blog:"

CBD Taxes Frequently Asked Questions

Yes, CBD (or products containing CBD) are not for nutritional supplement or dietary exemption of sales tax.