IVF, Egg Donation & Surrogacy: How to Make the Tax Code Work for You
- Heath Vo, JD, CPA
- 7 days ago
- 3 min read
Building a family through IVF, egg donation, or surrogacy is one of the most meaningful (and expensive) experiences many families will ever undertake. Between clinic fees, legal contracts, donor compensation, and agency costs, the price can climb well into six figures. And while the IRS tax rules aren’t exactly designed for modern fertility journeys, there are ways to leverage the Tax Code to ease the financial burden.
I know firsthand how complicated this can be — not just as a tax professional, but as someone who’s personally navigated the IVF process. It’s one thing to read the law in IRC §213; it’s another to write those checks and wonder what the IRS will actually let you deduct.
At ExFed Tax, we combine both perspectives — the insider IRS knowledge and the lived experience of going through fertility treatment ourselves — to help clients strategically finance their path to parenthood.
What the Tax Law Actually Says about Surrogacy & IVF tax deduction
The key law governing fertility-related deductions is Internal Revenue Code §213(d). Here’s the short version:
Medical expenses are deductible if they’re paid for you, your spouse, or your dependent.
HSA, FSA, and HRA reimbursements follow the same definition of “medical care.”
Surrogacy and donor costs (like compensation, agency fees, and surrogate medical bills) are not deductible for intended parents.
Payments to surrogates or donors are considered taxable income to the recipient.
Once your child is born, standard dependent and Child Tax Credit rules apply.
Deductible vs. Non-Deductible: Quick Reference
Expense Type | Deductible / Reimbursable | Authority |
IVF, retrieval, or sperm storage for you/spouse/dependent | Yes - IVF tax deduction | IRC §213(d); IRS Pub. 502 |
Fertility medications (prescribed) | Yes | IRC §213(d); Pub. 502 |
Travel for IVF treatment (your own) | Yes (limited) | IRC §213(d) |
Surrogate’s medical expenses | ❌ | Morrissey v. U.S.; Pub. 502 |
Surrogate compensation / agency fees | ❌ | Magdalin v. Comm’r |
Egg donor compensation | ❌ | Perez v. Comm’r |
Adoption credit for surrogacy | ❌ | Form 8839 Instructions |
IVF & Surrogacy Tax FAQ
Can I deduct IVF expenses for myself or my spouse?
Yes. IVF and fertility treatments performed on you, your spouse, or your dependent qualify as medical expenses under IRC §213(d).
Can I deduct or reimburse surrogacy costs?
No. The IRS and courts have ruled those expenses don’t qualify since they benefit someone other than you, your spouse, or your dependent.
Can I use my HSA or FSA for IVF?
Yes—for eligible fertility costs tied to your own medical care. No—for surrogate or donor expenses.
Is surrogate or donor compensation taxable to them?
Yes. Under Perez v. Commissioner, donor compensation is taxable income. The same principle applies to surrogates.
Can I claim the Child Tax Credit for a baby born via surrogacy?
Yes, once the child is born and you have their Social Security Number by your tax return’s due date (IRC §24(e)).
Are any adoption credits available for surrogacy?
No. The adoption credit excludes expenses for surrogate parenting or adopting your spouse’s child.
How can I make IVF and surrogacy more tax-efficient?
By planning payments, separating deductible vs. nondeductible expenses, using HSA/FSA funds strategically, and timing payments across tax years — all of which ExFed Tax can help you design.
Real Talk: IVF Is Expensive. But the Tax Code Can Help.
When my family went through IVF, I realized that tax planning could be a game-changer for families trying to afford fertility treatment. By carefully documenting expenses, using tax-advantaged accounts, and structuring payments, you can reduce your after-tax cost of starting a family — sometimes significantly.
At ExFed Tax, we help clients:
Identify which fertility and medical costs qualify under IRS rules.
Structure payments for maximum deductibility.
Use HSA/FSA strategies to save pre-tax dollars.
Develop financial plans that align fertility goals with long-term tax efficiency.
We understand both the tax code and the emotional code of IVF. Let’s make the system work for your family — and maybe let Uncle Sam help pay for your newborn.
Bottom Line
Deductible: IVF and fertility care for you, your spouse, or your dependent.
Not deductible: Surrogate and donor expenses.
Taxable: Compensation to surrogates and donors; however, factor in their potential deductions for medical expenses in excess of 7.5% AGI in contract negotations!
Strategic opportunity: Plan early, separate expenses, and document everything.
The Tax Code wasn’t written for modern families, but with strategy and expertise, you can use it to make your dream of parenthood a little more affordable.
ExFed Insight
You can’t outsmart biology—but you can outplan your taxes.Book a consultation with ExFed Tax to build your family and your financial strategy, one deductible dollar at a time.
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