Is Memory Care Tax Deductible? Rules, Fees, and the AGI Floor

Memory care is tax deductible as a medical expense when a licensed health care practitioner certifies the resident as chronically ill and the family itemizes deductions. For most memory care residents, that certification is straightforward, and the deductible amount can include the full facility bill — room, board, and care — not just the medical portion. Because memory care commonly runs from $60,000 to well over $100,000 a year, the deduction can meaningfully lower a family’s tax bill.

Who Has to Be Certified, and by Whom

The deduction turns on whether the resident meets the federal definition of a “chronically ill individual” under 26 U.S.C. § 7702B. There are two ways to qualify:¹

The person cannot perform at least two activities of daily living — eating, toileting, transferring, bathing, dressing, or continence — without substantial help, and the limitation is expected to last at least 90 days.
The person needs substantial supervision to stay safe because of severe cognitive impairment, such as Alzheimer’s disease or another dementia.

Most memory care residents qualify under the cognitive impairment path. Memory care units exist to provide the constant supervision people with dementia need to stay safe, which is exactly what the statute describes.

A licensed health care practitioner — a physician, registered nurse, or licensed social worker — has to put the certification in writing, and it must be renewed at least every 12 months.¹ Without a current certification on file, the IRS may treat the facility bill as a personal living expense rather than deductible medical care. The care also has to be provided under a plan of care prescribed by a licensed practitioner.² Most facilities create an individualized plan at admission; ask for a copy for your files.

What Memory Care Charges You Can Claim

Once the resident is certified, a broad range of memory care charges count as deductible medical expenses. The IRS treats eligible costs as including diagnostic, preventive, therapeutic, and rehabilitative services, along with “maintenance and personal care services” — help with daily tasks and protection from safety threats tied to cognitive impairment.²

Room and Board

Room and board at a care facility are deductible when the principal reason the person lives there is to receive medical care.² For a memory care resident that test is usually easy to meet. No one moves into a locked memory care unit for lifestyle reasons; the facility exists to deliver constant supervision and medical care for cognitive impairment. So the full facility charge, including meals and lodging, typically qualifies.

The comparison point matters. Someone in a standard assisted living community who is not there primarily for medical care can only deduct the medical portion of the bill, not room and board. Memory care residents are usually in the more favorable category.

Entry or Founder’s Fees

Some communities charge a one-time entry fee, sometimes called a founder’s fee or buy-in fee. The portion allocable to medical care is deductible, and the facility should provide a written breakdown showing how much of the fee covers future medical care versus housing and other services. A lump sum that bundles everything together without distinguishing the medical portion is not deductible.²

What Doesn’t Count

Purely personal or recreational charges — salon visits, entertainment outings, optional amenities — are not deductible when they fall outside the prescribed care plan. Ask the facility for itemized invoices that separate care charges from personal items so you can pull the right number for your return.

The 7.5% AGI Floor and Itemizing

Medical expenses are only deductible to the extent they exceed 7.5% of your adjusted gross income.³ If your AGI is $80,000, the first $6,000 in medical expenses gives you no tax benefit; only the amount above that reduces your taxable income. Memory care bills typically sit well above the floor, so most families paying these costs have a substantial deductible amount.

Before you apply the 7.5% calculation, subtract any insurance reimbursements, including Medicare payments and long-term care insurance benefits, from your total medical expenses.²

The medical expense deduction is only available if you itemize on Schedule A rather than take the standard deduction. Itemizing pays off only when your total itemized deductions — medical expenses above the 7.5% floor, plus state and local taxes, mortgage interest, charitable giving, and the rest — beat the standard deduction for your filing status. Given the size of memory care bills, families paying these costs often clear the bar.

One caveat for tax years 2025 through 2028: taxpayers age 65 or older can claim an extra $6,000 deduction ($12,000 for a couple where both spouses are 65 or older), phasing out above $75,000 in modified AGI ($150,000 joint).⁴ That raises the effective standard deduction bar, so compare carefully before choosing to itemize.

Paying for a Parent or Spouse

You can deduct memory care costs you pay for your spouse or a qualifying relative, not only for yourself. The person receiving care still has to meet the chronically ill certification, and you have to provide more than half of that person’s total support for the year.²

A rule buried in section 213 helps a lot of families here. For medical expense purposes, the gross income test that normally applies to a qualifying relative is waived.³ So even if your parent has income above the $5,300 qualifying-relative threshold for 2026, you can still deduct medical expenses you pay for them, as long as you supply more than half of their overall support and the relationship qualifies. Parents, grandparents, siblings, aunts, uncles, and in-laws all qualify, among others. A parent does not have to live with you; the IRS waives the household-member requirement for direct ancestors.⁵

When Siblings Split the Cost

When several family members share a parent’s memory care bill and no single person pays more than half, a multiple support agreement on Form 2120 lets one of them claim the dependency and deduct the medical expenses. The rules:⁶

The contributing relatives, together, must provide more than half of the parent’s total support.
The person claiming the deduction must personally cover more than 10% of support.
No single contributor can have paid more than half on their own.
Every other contributor who paid over 10% has to sign a written waiver of their right to claim the dependent that year.

You keep the signed waivers with your records; you do not file them with the return, but you have to produce them if asked.

How Long-Term Care Insurance and HSAs Change the Picture

If the resident has a long-term care insurance policy, subtract any benefits paid by the policy from your total medical expenses before applying the 7.5% floor.² So if memory care costs $90,000 and insurance reimburses $40,000, your starting point is $50,000, not $90,000. For per diem or indemnity policies that pay a fixed daily amount, benefits are tax-free up to $430 per day in 2026; amounts above that are taxable unless they match actual expenses.

Premiums for a tax-qualified long-term care insurance policy are themselves deductible medical expenses, subject to age-based annual caps that run from $500 for people 40 and under to $6,200 for people 71 and older. Those premiums add to your medical expense total and face the same 7.5% floor.

If you have a Health Savings Account, you can pay for memory care with HSA funds tax-free, as long as the resident is a qualifying account holder, spouse, or dependent and the chronic illness certification is in place. The trade-off: any dollar paid from the HSA cannot also be claimed as an itemized deduction. The HSA route is often simpler because it does not require itemizing or clearing the 7.5% floor. HSA funds can also cover tax-qualified long-term care insurance premiums, up to the same age-based limits.⁷

Records to Keep and Where to Report It

You do not send supporting documents with your return, but you need to keep them in case the IRS asks. For each tax year you claim memory care, hold on to:

The current written chronic illness certification from the licensed practitioner, renewed at least every 12 months.¹
Itemized facility invoices separating medical charges from personal or optional services.
Payment receipts showing amounts paid and dates through the year.
Long-term care insurance benefit statements and any other reimbursement records.
The written plan of care prescribed by the health care practitioner.

The IRS generally expects you to keep records supporting a deduction for at least three years from the date you file the return.⁸

You report the deduction in the medical and dental expenses section of Schedule A (Form 1040). Enter your total medical expenses net of reimbursements, subtract 7.5% of AGI, and the remainder is your deductible amount.⁹

1
Office of the Law Revision Counsel. 26 USC 7702B – Treatment of Qualified Long-Term Care Insurance
2
Internal Revenue Service. Publication 502 – Medical and Dental Expenses
3
Office of the Law Revision Counsel. 26 USC 213 – Medical, Dental, Etc., Expenses
4
Internal Revenue Service. One, Big, Beautiful Bill Act – Tax Deductions for Working Americans and Seniors
5
Internal Revenue Service. Publication 501 – Dependents, Standard Deduction, and Filing Information
6
Internal Revenue Service. Form 2120 – Multiple Support Declaration
7
Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
8
Internal Revenue Service. How Long Should I Keep Records
9
Internal Revenue Service. Instructions for Schedule A (Form 1040)