The PAW Act of 2025 allows pet owners and people with service animals to use pre-tax health savings accounts and flexible spending accounts to pay for veterinary expenses. Specifically, the bill permits taxpayers to set aside up to $1,000 per year tax-free for regular pet veterinary care and up to $1,000 for pet health insurance, with unlimited coverage for service animal care. The definition of eligible veterinary care includes diagnosis, treatment, prevention, medicine, surgery, and other services prescribed by a licensed veterinarian. The $1,000 annual caps for regular pets will automatically adjust upward each year after 2025 to account for inflation, rounding to the nearest $50. The bill applies to expenses incurred after its enactment and would primarily benefit pet owners by reducing their out-of-pocket veterinary costs through tax-advantaged savings accounts.
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