Tax-Free Sunscreen? Yes Please!

That mile-long receipt you just got from the drugstore may be more valuable than you think.

As we gear up for summer, you’re likely stocking up on warm-weather essentials. But before you toss that receipt in the trash, take a closer look. You might be holding the key to tax-free savings on the items you were already planning to buy.

The Secret Code on Your Receipt

Did you know that major drugstores actually tell you which items are eligible for tax-advantaged accounts? If you look at a receipt from Walgreens or CVS, scan the list of items you purchased. You will often see a little “F” or an “FSA/HSA” indicator printed right next to the price of qualifying items.

This simple letter takes the guesswork out of knowing what qualifies for reimbursement from your Health Savings Account (HSA) or Flexible Spending Account (FSA).

What Summer Items Are Eligible?

Under IRS Publication 502 (Medical and Dental Expenses) and IRS Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans), the definition of a qualified medical expense goes far beyond just doctor’s visits and prescriptions. Your HSA or FSA covers plenty of seasonal over-the-counter items:

• Sunscreen: To qualify under IRS guidelines, the sunscreen must be labeled “Broad Spectrum” with an SPF of 15 or higher. (Yes, this includes SPF lip balms!) Tanning oils or basic cosmetic lotions with an SPF of 8 do not count.
• Sunburn relief: Aloe vera gel can be eligible, but standard cosmetic aloe doesn’t always ring up as tax-free. It generally needs to be marketed specifically as an over-the-counter medicated sunburn treatment (often containing lidocaine) to get that magic “F” on the receipt.
• Allergy relief: Zyrtec, Claritin, Flonase, and other over-the-counter allergy meds.
• First-aid: Bandages, antibiotic ointment, and premade first-aid kits for summer road trips.

Family Coverage: IRS rules state you aren’t limited to buying these items just for yourself. You can use your pre-tax funds to purchase eligible items for your spouse and any tax dependents as well.

Note: This list is by no means exhaustive. For the official and complete rules on what qualifies as a medical expense, you should review IRS Publication 502 and IRS Publication 969. For an even deeper dive into how these accounts fit into your overall tax strategy, readers should consult the current edition of J.K. Lasser’s Your Income Tax.

How (and When) to Get Reimbursed

When it comes to paying for these items, you have three distinct strategies:

1. The Direct Route: Swipe your HSA or FSA debit card at the register. It’s quick, easy, and requires no out-of-pocket cash.
2. The Points Play: Pay for the items using your favorite rewards credit card to rack up points, miles, or cash back. Then, immediately submit the receipt to your HSA or FSA administrator to reimburse yourself.
3. The HSA “Shoebox” Strategy (Delayed Reimbursement): This strategy only applies to an HSA. Because IRS rules allow you to carry HSA funds forward indefinitely, you can pay out of pocket today, let your HSA funds stay invested and grow tax-free, and reimburse yourself years or even decades down the road!

The FSA Exception: Grace Periods and Carryovers

While an HSA allows you to keep your money forever, an FSA generally follows the IRS “use it or lose it” rule at the end of the plan year. However, under IRS Publication 969, your employer has the option to adopt one of two exceptions to help you avoid forfeiting your unspent money:

• The Grace Period: Instead of a carryover, your employer can grant a grace period of up to 2.5 months after the plan year ends to spend your remaining balance.
• The Carryover: Your employer can allow you to roll over a set amount of unused funds into the next plan year. For 2026, the IRS maximum carryover limit is $680.

By IRS rules, your employer can only offer one of these exceptions (or neither), so you’ll need to check your specific plan documents to see what safety net applies to your account.

The Golden Rule: Save Your Receipts Digitally

If you plan to reimburse yourself later, especially if you are utilizing the delayed HSA strategy, keeping your receipts is critically important.

If you are ever audited by the IRS, you must be able to prove that you had active HSA coverage at the exact time the expense occurred, and you need the itemized receipt to prove the purchase was an eligible medical expense.

However, drugstore receipts are printed on thermal paper. If you stick a receipt in a physical file folder, it will fade to a completely blank strip of paper within a year or two.

The fix: Snap a photo or scan your receipts immediately and back them up to a cloud drive. The IRS legally accepts digital copies of receipts (as outlined in IRS Revenue Procedure 97-22) as long as they are fully legible. Saving them digitally keeps your records compliant and audit-proof without the fading paper clutter.

Please note, unlike that chip you’re eating at the family barbeque, you can’t double-dip. Tax-advantaged funds can only be applied once. For example, if you reimbursed yourself with HSA funds, you cannot also reimburse yourself from your FSA.