Long-term care insurance premiums are tax deductible, but only if the policy is federally qualified and only up to an age-based dollar cap the IRS resets each year. For 2026, that cap runs from $500 if you’re 40 or younger to $6,200 if you’re over 70. Whether the deduction actually lowers your tax bill depends on how you file: self-employed people and business owners get a direct benefit, while W-2 employees usually have to clear two more hurdles before any of it counts.
Your Policy Has To Be Federally Qualified
Only contracts that meet the definition of a “qualified long-term care insurance contract” under Internal Revenue Code Section 7702B produce a deduction. A qualifying policy covers only long-term care services, is guaranteed renewable, builds no cash value, applies any refunds or dividends to future premiums or benefits rather than paying them out, and doesn’t duplicate Medicare except as a secondary payer. Policies issued before January 1, 1997 are generally grandfathered in.1Office of the Law Revision Counsel. 26 USC 7702B – Treatment of Qualified Long-Term Care Insurance
If your policy doesn’t meet these requirements, the premiums aren’t deductible at any level. The trade-off is that benefits from a non-qualified policy are generally not taxed as income either.
How Much You Can Deduct by Age
Even with a qualified policy, you can’t deduct the full premium. The IRS caps the eligible amount based on your age at the end of the tax year, and anything above the cap simply doesn’t count. The limits apply per person, so a married couple with two policies each gets their own.
For the 2026 tax year, the eligible premium limits are:2Internal Revenue Service. Revenue Procedure 2025-32
- Age 40 or under: $500
- Age 41 to 50: $930
- Age 51 to 60: $1,860
- Age 61 to 70: $4,960
- Age 71 or older: $6,200
A 65-year-old paying $5,500 a year can count $4,960 toward medical expenses. The other $540 does nothing for taxes. And that $4,960 still has to survive the next two filters before it reduces anything.
Why Most W-2 Employees See No Benefit
If you’re not self-employed, your eligible LTC premium goes on Schedule A with every other unreimbursed medical expense. Two things usually get in the way.
First, you can only deduct medical costs that exceed 7.5% of your adjusted gross income.3Internal Revenue Service. Publication 502 (2025) – Medical and Dental Expenses On a $100,000 AGI, the first $7,500 of medical spending produces zero deduction. If your eligible premium plus everything else comes to $6,000, you get nothing.
Second, you have to itemize. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Itemizing only pays off when your total itemized deductions — medical, state and local taxes, mortgage interest, charitable giving — exceed that threshold. For many filers, the LTC premium is nowhere near enough to tip the scale, and the deduction effectively disappears.
Self-Employed Filers Get a Direct Deduction
Sole proprietors, partners, LLC members taxed as partnerships, and more-than-2% S corporation shareholders can deduct the eligible LTC premium as part of the self-employed health insurance deduction. It’s an above-the-line deduction, so it reduces your adjusted gross income directly. You don’t need to itemize, and the 7.5% AGI floor doesn’t apply.5Internal Revenue Service. Topic No. 502 – Medical and Dental Expenses
The age-based cap still applies, and the deduction can’t exceed your net self-employment income. If your business nets $3,000 and your eligible premium is $4,960, you’re held to $3,000. Any portion you can’t deduct above the line can still be moved to Schedule A if you itemize.
One rule catches people out: you can’t claim this deduction for any month you were eligible to participate in a subsidized health plan through your own employer or your spouse’s. The IRS applies the test separately for long-term care, though, so being eligible for a spouse’s medical plan doesn’t block the LTC piece if that plan doesn’t include long-term care benefits.6Internal Revenue Service. Instructions for Form 7206
S Corporation Shareholders
If you own more than 2% of an S corporation, the mechanics are specific. The corporation pays the premium and reports it as wages in Box 1 of your W-2. Those wages carry income tax withholding but not Social Security or Medicare tax. You then claim the self-employed health insurance deduction on your personal return to offset the added income.7Internal Revenue Service. 8Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses and the employee, including an owner-employee, excludes the premium from gross income as an employer-provided health benefit.9Office of the Law Revision Counsel. 26 USC 106 – Contributions by Employer to Accident and Health Plans The age-based limits don’t cap the corporation’s deduction, and the benefit can be offered selectively rather than to every employee.
Using an HSA Instead
A Health Savings Account can pay qualified long-term care premiums tax-free. It’s one of the few insurance types HSAs are allowed to cover. The age-based limits still govern how much you can withdraw for this purpose each year — $500 at age 40 or under up to $6,200 at 71 and over — without the distribution being taxed.10Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
This is often the best option for people who take the standard deduction and get no benefit from Schedule A. If you’re younger and your age cap is low, the HSA route may be the only way the premium produces any tax savings at all.
Hybrid Life and Annuity Policies
Hybrid products that combine life insurance or an annuity with long-term care coverage are deductible only in pieces. The contract has to break out the long-term care component as a separately identifiable premium. The life insurance portion is never deductible. Only the amounts specifically allocated to LTC acceleration benefits, extension benefits, and inflation protection count, and those amounts remain subject to the age-based caps and the same itemizing or self-employed rules that apply to standalone policies.
State Tax Breaks on Top
A number of states offer their own tax credits or deductions for long-term care premiums in addition to the federal treatment. Some give a flat credit; others follow the federal rules with their own caps. The incentives change often and only help if you owe state income tax. Check your state’s current rules before deciding whether a policy’s tax benefit is worth it, because the state-level savings can shift the math meaningfully, especially when the federal deduction is swallowed by the AGI floor.