Background: Financial hardship of healthcare is defined as difficulty of obtaining affordable care, including having to delay or forgo healthcare because of its cost. Financial protection, a global (e.g. Sustainable Development Goals) and a national (e.g. Health Sector Transformational plan II) priority area, is achieved when there are no financial barriers to access essential health services. However, financial hardship of healthcare has not been well studied in Ethiopia in general and in Debretabor town in particular. Objective: This study aimed to assess financial hardship of healthcare and associated factors among households in Debretabor town. Methods: Community based cross sectional study was conducted, from May 24/2022 to June 17/2022, on 423 households (selected through computer generated simple random sampling method) in Debretabor town. Financial hardship was measured through catastrophic (using 10% threshold level) and impoverishing (using $1.90 poverty line) health expenditures. Patient perspective bottom up and prevalence based costing approach were used. Indirect cost was estimated through human capital approach (absenteeism from work). Data were entered into EpiData version 3.1 and exported to SPSS version 25 for analysis. Bivariable and multivariable logistic regression were used. The ethical clearance was obtained from Institutional Review Board of College of Medicine and Health Science and informed verbal consent was obtained from each participant. Results: A response rate of the study participants was 95%. The mean household annual healthcare expenditure was Ethiopian birr 12050.64. About 37.1% (95%CI: 32, 42%) of the households encountered catastrophic health expenditure with a 10% threshold level and 10.4% of households were impoverished with $1.90 a day extreme poverty line because of their health expenditure. Age of household head (AOR: 4.21, CI: 1.23, 14.45), health insurance (AOR: 2.19, CI: 1.04, 4.62), chronic health conditions (AOR: 7.20, CI: 3.64, 14.26), traditional healthcare seeking (AOR: 2.63, CI: 1.37. 5.05) and social support (AOR: 2.77, CI: 1.25, 6.17) were found to be statistically significant factors for catastrophic health expenditure. Conclusion and recommendations: The study showed that significant number of households did not yet protected from financial risk of healthcare. The financial hardship of healthcare is stronger among the less privileged populations: the non-insured, the chronically ill, the elder and socially unsupported. Therefore, financial risk protection strategies, such as intensification of enrolling to health insurance and social support, should be strengthened by the concerned bodies. Key words: Financial hardship, Healthcare, Debretabor, 2022 Abbreviations