Are Elderly Care Costs Tax Deductible?

The costs of caring for an elderly individual can be substantial. The federal tax code offers relief by allowing taxpayers to deduct certain elderly care costs as medical expenses, but this is governed by a specific set of rules from the Internal Revenue Service (IRS). To claim the deduction, the person receiving care must be a qualifying individual, the care must be medically necessary, and the expenses themselves must be eligible.

Qualifying Person and Medical Necessity Requirements

For elderly care costs to be tax-deductible, they must be for a “qualifying person,” which includes the taxpayer, their spouse, or a qualifying dependent. For an elderly relative to be a qualifying dependent for medical expenses, they must meet the gross income and support tests. The gross income test requires the individual’s income to be below a certain threshold ($5,200 for 2025), which excludes most non-taxable Social Security benefits.

The support test requires the taxpayer to provide more than half of the individual’s total support for the year, which includes living expenses like housing, food, and medical care. If multiple people contribute to a parent’s support, a Multiple Support Agreement may allow one person to claim the dependent. This is possible if the group provides over half the support and the person claiming the deduction provides over 10%.

Beyond being a qualifying person, the care must be medically necessary. The IRS defines this for long-term care by classifying an individual as “chronically ill.” A person is considered chronically ill if a licensed health care practitioner certifies they cannot perform at least two Activities of Daily Living (ADLs) without substantial assistance for at least 90 days. ADLs include basic self-care tasks such as eating, bathing, dressing, toileting, transferring between a bed and chair, and maintaining continence.

Alternatively, an individual is certified as chronically ill if they need substantial supervision to protect them from health and safety threats due to severe cognitive impairment, such as Alzheimer’s disease. This certification must be part of a formal plan of care prescribed by a licensed health care practitioner, like a doctor or registered nurse. This plan outlines the specific services needed to address the individual’s medical condition.

Deductible Long-Term Care Services and Expenses

Once the requirements for a qualifying person and medical necessity are met, specific expenses related to their care may be deducted. The eligibility of these costs depends on the care setting and the nature of the services provided.

Nursing Home Costs

If the primary reason for being in a nursing facility is to receive medical care, the entire cost of the stay is deductible, including meals and lodging. However, if an individual resides in the nursing home for personal reasons, only the portion of the cost directly for medical or nursing care is deductible. In this case, meals and lodging are considered personal living costs and cannot be deducted.

In-Home Care

Costs for care received in an individual’s home can also be deductible. Payments for nursing services, such as administering medication or changing dressings, are eligible medical expenses. Personal care services that assist with Activities of Daily Living are also deductible if they are provided to a chronically ill individual as part of their prescribed plan of care.

Capital Expenses for Medical Care

Making physical modifications to a home for a medical condition can be a deductible expense. The cost of installing equipment like ramps, support bars, or chair lifts is deductible to the extent that the cost exceeds any resulting increase in the home’s value. For example, if a $10,000 modification increases the home’s value by $6,000, you can deduct $4,000. Some improvements that do not increase a home’s value, such as modifying fire alarms for the visually impaired, may be fully deductible.

Other Qualified Expenses

A range of other costs associated with medical care are also deductible. This includes the cost of prescription drugs and insulin. Transportation costs for medical care are also eligible and can be calculated as the actual cost of gas and oil or by using the standard medical mileage rate, which is 21 cents per mile for 2025. Additionally, premiums paid for qualified long-term care insurance policies are deductible up to certain age-based limits. For 2025, these limits are $480 for those age 40 or under, $900 for ages 41 to 50, $1,800 for ages 51 to 60, $4,810 for ages 61 to 70, and $6,020 for individuals over 70.

How to Claim the Medical Expense Deduction

To claim the deduction, you must first meet an income-based threshold. Taxpayers can only deduct the amount of their total medical expenses that exceeds 7.5% of their Adjusted Gross Income (AGI). For instance, if your AGI is $60,000, the threshold is $4,500. If your total qualified medical expenses were $12,000, you could deduct $7,500.

To claim this deduction, you must itemize deductions on Schedule A (Form 1040) instead of taking the standard deduction. The final deductible amount from Schedule A is carried over to your Form 1040, reducing your overall taxable income. It is only beneficial to itemize if your total itemized deductions exceed the standard deduction amount for your filing status. Careful record-keeping of all medical costs throughout the year is necessary to accurately calculate and substantiate the deduction.

Other Tax-Advantaged Options for Care Costs

Beyond the itemized deduction for medical expenses, other tax-advantaged accounts and credits can help manage care costs. These options may be accessible even if you do not itemize deductions.

Flexible Spending Accounts and Health Savings Accounts

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) are tax-advantaged savings plans used to pay for qualified medical expenses, including many long-term care services. Contributions are often made with pre-tax dollars, and withdrawals for eligible expenses are tax-free. This allows you to pay for care costs without the money being subject to income tax, which can be more advantageous than a deduction limited by the 7.5% AGI floor.

Child and Dependent Care Credit

The Child and Dependent Care Credit is available to taxpayers who pay for care for a qualifying individual, which allows the taxpayer to work or look for work. A qualifying individual includes a spouse or dependent who was physically or mentally incapable of self-care and lived with you for more than half the year. The same expense cannot be used for both the medical expense deduction and this credit; you must choose which tax benefit to apply to a given cost.