Can I deduct my cost for medical marijuana on my state taxes?

Photo: Olofsson

Q. Can I deduct my cost for medical marijuana on my state taxes?
— Wondering

A. This is an interesting question.

Medical marijuana is legal in New Jersey, however, medical marijuana has not been legalized in federal law.

For federal law purposes, medical marijuana is considered a “controlled substance” and the expenses for marijuana and other controlled substances cannot be included as a medical expense for federal taxation purposes, said Patricia Daquila, a certified financial planner and certified public accountant with Peapack Private Wealth Management in New Providence.

Let’s turn to New Jersey.

According to the NJ-1040 instructions for the NJ-1040 for 2021, generally, only medical expenses that are allowed for federal tax purposes are allowed as medical expenses for New Jersey, Daquila said.

Therefore, medical marijuana is not allowed as a medical expense for New Jersey currently because it is disallowed for federal taxation purposes, she said.

“This was confirmed by an email with the Taxation Regulatory Services for New Jersey,” she said. “Even if it was allowed as a medical expense for New Jersey, you can only deduct medical expenses in New Jersey that are more than two percent of your gross income.”

But, she said, if marijuana is legalized by federal law, the deductibility could change.

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This story was originally published on Feb. 11, 2022. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.