Section 80D of Income Tax Act: Health Insurance Deductions for FY 2025–26
Section 80D of the Income Tax Act stands as one of the most practical tools for Indian taxpayers, offering a way to safeguard family health while lowering tax liability. As medical costs continue to climb in 2025, the government uses this section to encourage citizens to invest in private health insurance rather than relying solely on out-of-pocket spending. Unlike the general investment limits of Section 80C, Section 80D is specifically dedicated to health-related expenses, including premiums for yourself, your spouse, children, and parents. By strategically utilizing these limits, which are particularly generous for senior citizens, you can significantly reduce your taxable income while ensuring your loved ones have access to quality healthcare.
What is Section 80D all about?
Section 80D allows you to subtract the money you spend on health insurance premiums from your total income before the tax is calculated. If you are in the Old Tax Regime for the Financial Year 2025-26, this is one of the best ways to keep your hard-earned money.
It’s important to note that the New Tax Regime (which is now the default) generally does not allow these deductions. So, if you are paying high premiums for your family and elderly parents, you’ll want to do a quick calculation to see if the Old Regime saves you more.
Similar topic: What is Section 80D of the Income Tax Act?
Who can you claim for?
You can’t claim for just anyone. The law is quite specific. You can claim deductions for:
- Yourself
- Your Spouse
- Dependent Children (those who aren't earning yet)
- Parents (whether they depend on you financially or not)
Note: You cannot claim for siblings, grandparents, or in-laws, even if you are the one paying their bills.
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Breaking down the limits (2025-26)
The amount you can claim depends mostly on age. The magic number in the eyes of the Tax Department is 60.
1. For your Nuclear Family (Self, Spouse, Kids)
- If everyone is under 60: You can claim up to ₹25,000.
- If you or your spouse is 60+: The limit increases to ₹50,000.
2. For your Parents
This is an additional limit on top of your family's limit.
- Parents below 60: You get an extra ₹25,000.
- Parents 60 or older: You get an extra ₹50,000.
The Max Savings Scenario
If you are a senior citizen (60+) paying for your own insurance and also paying for your senior citizen parents, you could potentially claim a total deduction of ₹1,00,000 ($50,000 + 50,000$).
Your Family Status
Parents' Age
Your Limit
Parents' Limit
Total Deduction
Under 60
Under 60
₹25,000
₹25,000
₹50,000
Under 60
60+ (Seniors)
₹25,000
₹50,000
₹75,000
60+ (Seniors)
60+ (Seniors)
₹50,000
₹50,000
₹1,00,000
The Health Check-up Bonus
Most people forget that the government actually rewards you for staying proactive. You can claim up to ₹5,000 for preventive health check-ups every year.
- Is it extra? No, it’s included in the limits above. If your premium is ₹22,000 and your check-up costs ₹5,000, you can only claim ₹25,000 total (for the under-60 bracket).
- The Cash Rule: While insurance premiums must be paid digitally (UPI, Card, Net Banking), the ₹5,000 for health check-ups is the only part you can pay in cash and still get the tax benefit.
No Insurance? No Problem (For Seniors)
Section 80D is designed for elderly parents who might not have an active insurance policy. We all know that getting new health insurance after 70 or 80 can be nearly impossible or incredibly expensive.
In such cases, if a Resident Senior Citizen (60+) does not have insurance, you can claim their actual medical expenses (doctor fees, hospital bills, medicines) as a deduction up to ₹50,000.
The Catch: You must pay these bills through a bank (cheque, card, or UPI). Cash payments for medicines or surgeries won't count toward this tax break.
Common mistakes to avoid
Even smart taxpayers sometimes lose their 80D benefit because of small errors. Here is how to keep your claim safe:
- The Cash Trap: Never pay your insurance premium in cash. If it doesn't leave a paper trail through your bank account, the Income Tax Department will reject the claim.
- Working Kids: If your son or daughter has started their first job and is earning, you can no longer claim the premium you pay for them. They are no longer dependent.
- Group Insurance: If your office provides Free health insurance, you can't claim it. You can only claim the portion that is actually deducted from your salary or any top-up plan you buy yourself.
- Multiple Years: If you pay for a 3-year policy in one go to get a discount, you must split the deduction across those 3 years. You can't claim the whole amount in Year 1.
Conclusion
Section 80D is about more than just numbers on a tax form; it’s about providing a safety net for your family. By understanding that you can claim up to ₹1 lakh, especially if you are looking after elderly parents, you can significantly lower your tax bill. Just remember that for the 2025-26 cycle, these benefits only apply if you choose the Old Tax Regime. Keep your receipts safe, pay through digital channels, and make sure to include that ₹5,000 health check-up to get every bit of value out of this section.