PAW Act of 2025

This bill amends the Internal Revenue Code to allow certain veterinary expenses for pets and service animals to be treated as medical care costs, making them eligible for reimbursement from health savings accounts (HSAs) or flexible savings accounts (FSAs).

Sec. 2, Veterinary expenses treated as medical care: The bill adds a new paragraph to the tax code so that amounts paid for veterinary care or pet health insurance for a service animal of the taxpayer, spouse, or dependent are treated as medical care. For a pet of the taxpayer, spouse, or dependent, up to $1,000 per year for veterinary care and up to $1,000 per year for a pet health insurance plan are treated as medical care. A 'pet' is defined by reference to the Agriculture Improvement Act of 2018, a 'service animal' by federal regulations, and 'veterinary care' includes diagnosis, treatment, prevention of disease or injury, and related services authorized by a licensed veterinarian. These dollar limits are adjusted for inflation after 2025, rounded to the nearest $50. The change applies to amounts paid after the bill's enactment.