Aged care fees are tax deductible when they qualify as medical expenses, but only the portion of your total unreimbursed medical costs that exceeds 7.5% of your adjusted gross income counts, and you have to itemize on Schedule A to claim any of it.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses Nursing home costs tied to medical care get the broadest treatment, including room and board. Assisted living and home care are deductible on narrower terms that depend on medical necessity and documentation.
The 7.5% AGI Floor and Itemizing
Federal law lets you deduct unreimbursed medical expenses, but only the amount above 7.5% of your adjusted gross income actually reduces your taxable income. If your AGI is $80,000, the first $6,000 of medical spending produces no deduction. Only dollars above that floor count.
You also have to itemize instead of taking the standard deduction. Itemizing pays off only when your combined deductions (medical expenses, state and local taxes, mortgage interest, charitable contributions) exceed the standard deduction for your filing status. Families paying significant care costs often clear it. Someone with modest deductions is better off skipping Schedule A entirely.
Any expenses reimbursed by insurance or another source are subtracted first, before you apply the 7.5% floor to what remains.2Internal Revenue Service. Topic No. 502, Medical and Dental Expenses The 7.5% threshold is permanent under current law, so there is no scheduled expiration to plan around.
Nursing Home Costs
Nursing home expenses get the most favorable treatment of any aged care fee. If a principal reason someone lives in a nursing home is to receive medical care, the entire cost qualifies as a medical expense, including meals and lodging.3Internal Revenue Service. Publication 502 – Medical and Dental Expenses That matters because room and board typically make up the largest share of the bill.
Most people entering a skilled nursing facility need ongoing medical or nursing care, so the full cost normally qualifies. The rule tightens when someone moves into a care home mainly for personal reasons or convenience. In that case, only the portion of the bill directly attributable to medical or nursing care is deductible, and meals and lodging are excluded.4Internal Revenue Service. Medical, Nursing Home, Special Care Expenses
The dollar difference is large. A semi-private nursing home room averages roughly $112,000 a year nationally. Under a medical-necessity stay, the whole amount (minus reimbursements) feeds into the medical expense calculation. Under a personal-reasons stay, only the nursing services portion counts.
Assisted Living Fees
Assisted living rules are stricter. Because these communities serve residents with a wide range of needs, the IRS requires proof that the resident is “chronically ill” before the full monthly fee can be treated as a medical expense.
A person is chronically ill if a licensed health care practitioner has certified, within the past 12 months, that they meet one of two conditions: they cannot perform at least two activities of daily living without substantial help for a period of at least 90 days, or they need substantial supervision because of severe cognitive impairment such as Alzheimer’s disease or dementia.5Office of the Law Revision Counsel. 26 USC 7702B – Treatment of Qualified Long-Term Care Insurance The six activities of daily living the IRS recognizes are eating, toileting, transferring, bathing, dressing, and continence.
When a resident meets that standard, the qualified long-term care services they receive, including maintenance and personal care, become deductible medical expenses. The care must also be provided under a plan prescribed by a licensed health care practitioner. This is the most common place families lose the deduction: paying thousands per month in assisted living fees without ever getting the medical certification on file.
If the resident doesn’t meet the chronically ill definition, the same rule as personal-reason nursing home stays applies. Only the portion of the bill tied to actual medical or nursing services qualifies. Social activities, housekeeping, and lifestyle amenities are not deductible.
Home Health Care
Paying for care at home doesn’t disqualify the expense. Wages you pay for nursing services are deductible whether or not the caregiver is a licensed nurse, as long as the services are the kind a nurse typically performs: administering medication, changing dressings, and bathing and grooming related to the patient’s condition.3Internal Revenue Service. Publication 502 – Medical and Dental Expenses
Most home health aides split their time between medical tasks and household chores. When that happens, you have to divide the cost. Only the portion of wages attributable to medical or nursing services is deductible. Companion care, meal preparation, housekeeping, and errands are not, however necessary they feel.
A simple daily time log showing what your caregiver does makes the split defensible if the IRS asks. Without one, you are estimating, and the IRS will not extend the benefit of the doubt.
Long-Term Care Insurance Premiums
Premiums for a qualified long-term care insurance policy count as medical expenses, but the deductible amount is capped by your age at the end of the tax year. The 2026 limits are:6Internal Revenue Service. Revenue Procedure 2025-32
- Age 40 or younger: up to $500
- Age 41 to 50: up to $930
- Age 51 to 60: up to $1,860
- Age 61 to 70: up to $4,960
- Age 71 or older: up to $6,200
If your actual premium is lower than your age-bracket limit, you deduct what you paid. For married couples filing jointly, each spouse applies their own age-based limit. These premiums then join your other medical expenses in the 7.5% AGI calculation, so they help most when other care costs have already pushed you over the floor.
Premiums an employer pays on a pre-tax basis do not count toward your deduction. The policy itself must meet IRS standards for “qualified” long-term care insurance, which your insurer can confirm.
Paying for a Parent’s Care
You do not have to be the person receiving care to claim the deduction. You can include medical expenses you pay for your spouse, a dependent, or someone who would qualify as your dependent except that they earned too much income or filed a joint return.1Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses The rule is built for the situation where an adult child pays a parent’s nursing home bills.
To claim a parent as a qualifying relative, you generally need to provide more than half of their total financial support, and for standard dependency purposes their gross income must be below $5,050 for 2026.7Internal Revenue Service. Dependents Here is the part most people miss: even if your parent’s Social Security income puts them above that gross income limit, so they can’t be claimed as a dependent, you can still deduct their medical expenses as long as you provided more than half their support.3Internal Revenue Service. Publication 502 – Medical and Dental Expenses
When Siblings Share the Cost
When several children share the cost of a parent’s support, a multiple support agreement lets one sibling claim the parent as a dependent. There is a catch on medical expenses. The sibling who claims the parent can only include the medical bills they personally paid, not the portions the other siblings reimbursed them for. The other siblings can’t deduct their contributions either.
A cleaner arrangement, when it fits the family’s situation, is for one sibling to cover general support costs and another to pay the medical bills directly. The sibling paying medical expenses on their own can then deduct the full unreimbursed amount rather than losing part of it to the multiple support allocation rules.
Using an HSA When You Can’t Itemize
If you have a high-deductible health plan, a Health Savings Account lets you pay qualified medical expenses, including many aged care costs, with pre-tax dollars. HSA funds can cover the same expenses that qualify for the itemized deduction: nursing care, qualified long-term care services, and long-term care insurance premiums up to the age-based limits.
The advantage is that HSA withdrawals for qualified expenses are tax-free, and you don’t need to clear the 7.5% AGI floor or itemize to benefit. For people whose total deductions fall below the standard deduction, this is often the only way to get a tax benefit from care costs. One rule to watch: if you pay an expense with HSA funds, you cannot also claim it as an itemized medical deduction. You get one tax benefit, not both.
How to Claim the Deduction
Aged care expenses are reported in the medical and dental expenses section of Schedule A on Form 1040. You total the qualifying expenses for the year, subtract any insurance reimbursements, then subtract 7.5% of your AGI. What remains flows into your total itemized deductions.
Only expenses you actually paid during the tax year count. A bill received in December but paid in January belongs on next year’s return. That timing rule occasionally makes it worth accelerating or deferring payments to bunch medical expenses into a single year when you’ll clear the 7.5% floor.
Records to Keep
The IRS requires you to keep supporting records for at least three years from the date you file the return claiming the deduction.8Internal Revenue Service. How Long Should I Keep Records? For aged care, that means:
- Facility statements with a monthly or annual breakdown showing what portion of charges covers medical or nursing care versus room and board or amenities.
- The written chronic illness certification from a licensed health care practitioner, dated within the relevant 12-month period.
- Explanation-of-benefits statements showing what your insurer or Medicare paid, so you can prove the amount you claim is truly unreimbursed.
- For home care, records showing hours worked, duties performed, and amounts paid, with the split between medical and non-medical services.
If the IRS reviews your return and you cannot produce documentation for the care expenses you claimed, the deduction is reversed and you will owe the additional tax plus interest.