Are long-term care expenses tax deductible? Yes, but far less often than families expect. Most retirees assume the tax code will absorb part of a nursing home or assisted living bill. Three separate hurdles usually block that outcome.
Understanding those hurdles early changes how you fund care. It also prevents a costly mistake at the worst possible moment.
Hurdle One: The 7.5% AGI Floor
The IRS only counts unreimbursed medical expenses above 7.5% of your adjusted gross income. Everything below that line gives you nothing.
Consider a Tucson couple with $120,000 of AGI. Their floor sits at $9,000. They must spend past that amount before a single dollar becomes deductible. Higher retirement income raises the bar further, which affects business owners and high-net-worth families most.
Hurdle Two: You Have to Itemize
The medical deduction lives on Schedule A. Consequently, it helps only if your itemized total beats the standard deduction.
For 2026, the standard deduction reaches $16,100 for single filers and $32,200 for joint filers. Anyone 65 or older adds $2,050 single, or $1,650 per qualifying spouse. Separately, a temporary deduction of $6,000 per qualifying individual aged 65 and over runs through 2028, phasing out above $75,000 of modified AGI for single filers and $150,000 for joint filers. How those pieces interact with your decision to itemize is worth confirming with your CPA, because together they move the bar considerably.
Most retirees never clear that bar. As a result, their out-of-pocket care costs deliver zero tax benefit.
Hurdle Three: What Actually Counts as Medical Care
Here is where most articles get the rule wrong. The deduction does not depend on the type of facility. It depends on the resident’s certification.
A licensed health practitioner must certify the resident as chronically ill. Per IRS Publication 502, that means one of two situations applies:
- Two or more ADLs. The resident cannot perform at least two activities of daily living without substantial help, and cannot for at least 90 days. The IRS counts six: eating, toileting, transferring, bathing, dressing, and continence.
- Severe cognitive impairment. The resident requires substantial supervision to stay safe, as with advanced Alzheimer’s.
When that certification exists and the stay serves primarily medical purposes under a written plan of care, the entire bill can qualify. Room and board included. Without it, only the portion billed directly for medical services counts. Rent and meals then stay personal expenses.
Recertification matters too. The practitioner must have certified the condition within the past 12 months.
Do Long-Term Care Insurance Premiums Qualify
Yes, though the IRS caps the amount by age. For 2026, someone aged 61 to 70 can count up to $4,960 in premiums. Anyone 71 or older can count up to $6,200. The limit applies per insured person, so each spouse uses their own age.
Those caps sit on top of the 7.5% floor rather than replacing it. Still, the allowance grows as you age, so the benefit improves over time.
Why Self-Funding Creates a Second Tax Problem
Families who discover these limits often decide to self-fund care from savings. That instinct makes sense. However, the funding method carries its own penalty.
Withdrawals from traditional IRAs and 401(k)s count as ordinary income. A sudden large distribution therefore inflates your AGI in a single year. That spike does three things at once.
- It can push you into a higher marginal bracket.
- It raises your 7.5% floor, shrinking the very deduction you hoped to claim.
- It increases IRMAA surcharges on your Medicare premiums two years later, as our guide to whether Retirement Income Affect Medicare Premiums explains.
Notice the irony in the second point. Funding care from a tax-deferred account can make the care itself less deductible. Coordinated income planning anticipates that interaction well before the bills arrive.
How Do You Plan Around the Hurdles
Three approaches reduce the exposure. Each works better with years of lead time.
Reposition Assets Through a Pension Protection Act Exchange
The Pension Protection Act allows certain non-qualified annuities to move into contracts with long-term care benefits. Distributions used for qualified long-term care can then come out tax-free. This repositions an existing asset rather than requiring new money. Our insurance planning work covers how these structures compare.
Spread the Funding Across Years
Paying premiums over an optimized timeline avoids one large liquidation event. Smaller distributions across several years keep your AGI steadier. Steadier AGI protects your bracket, your deduction floor, and your Medicare premiums together.
Position the Portfolio Before You Need It
Families who prefer to self-fund still benefit from advance structure. Asset location determines which accounts you tap first. Tax-loss harvesting can offset gains in a heavy withdrawal year. Both require planning ahead of the need, not during it.
When Should Planning Begin
Most families start evaluating options in their fifties and sixties. Earlier planning brings lower premium baselines and more available structures. Health underwriting also becomes a limiting factor as conditions develop.
Waiting narrows your choices considerably. By the time care becomes necessary, most repositioning options have closed.
Where Global Investment Strategies Fits
We have coordinated income plans for Tucson families since 2009. Long-term care planning touches your tax return, your portfolio, your insurance, and your estate documents simultaneously. Those pieces have to agree with each other.
We work alongside your CPA and attorney rather than replacing them. They handle the filings and the legal drafting. We keep the funding strategy aligned with both.
Review Your Care Funding Strategy
Ask one question about your current plan. If a significant care need arrived next year, which account would pay for it? The answer reveals whether your plan anticipates the tax consequences.
Families across Tucson, Oro Valley, Marana, and the Catalina Foothills work through this question well before they face it. Request a private conversation and we will map your care funding options against your full income picture.
Global Investment Strategies provides educational planning concepts and works alongside your qualified legal, tax, and financial professionals. This article is educational and is not individualized tax, legal, or financial advice. Deduction eligibility depends on your specific facts, so confirm any strategy with your CPA before acting.
