Is assisted living tax deductible? What families should ask a tax pro

Assisted living can cost tens of thousands of dollars a year, so it's natural to ask whether any of it comes back at tax time, either on your parent's return or on yours if you're paying. The answer depends on your parent's health, the reason for the move, who pays, and the rest of the tax return. This post explains what the IRS rules say, what records make a deduction possible, and the questions to bring to a tax professional, who makes the actual call.

What IRS Publication 502 says about assisted living costs

Publication 502 doesn't use the words "assisted living," so you have to read two sections together.

Nursing Home. You can include in medical expenses the cost of medical care in a nursing home, home for the aged, or similar institution. That includes the cost of meals and lodging if a principal reason for being there is to get medical care. If the reason for being there is personal, you can include only the part of the cost that is for medical or nursing care, not the meals and lodging.

Long-Term Care. You can include amounts paid for qualified long-term care services. These include personal care services (help with daily activities) that are required by a chronically ill individual and provided under a plan of care prescribed by a licensed health care practitioner.

Put together, the rules lead to different outcomes depending on the situation:

Whether a particular community is a "similar institution," and what share of the bill qualifies for your parent, is exactly the judgment a tax professional should make with your records in front of them.

The "chronically ill" test and the plan of care

Publication 502 defines a chronically ill individual as someone a licensed health care practitioner has certified, within the previous 12 months, as meeting either of these:

• Unable to perform at least two activities of daily living without substantial assistance from another person for at least 90 days, due to a loss of functional capacity. The activities of daily living are eating, toileting, transferring, bathing, dressing and continence.
• Requiring substantial supervision to be protected from threats to health and safety because of severe cognitive impairment.

Two practical points follow. First, the certification has a clock: "within the previous 12 months." Ask your parent's doctor about it at the annual visit, not the week taxes are due. Second, services must follow a plan of care prescribed by a licensed practitioner. If the community writes a service or care plan, ask your tax professional whether that plan, the doctor's orders, or both are what you'll need.

Publication 502 also says a qualified long-term care insurance contract covers only qualified long-term care services, so if your parent is claiming on such a policy, the paperwork often overlaps. See using long-term care insurance for assisted living.

The 7.5% of AGI rule and itemizing

Even qualifying expenses aren't fully deductible. Publication 502 says you can deduct on Schedule A (Form 1040) only the part of total medical and dental expenses that is more than 7.5% of adjusted gross income (AGI).

A hypothetical example: your dad's AGI is $40,000. 7.5% of that is $3,000. If his qualifying medical expenses for the year, including the qualifying part of his assisted living bill, total $50,000, the amount above the threshold is $47,000. That figure then competes with the standard deduction; itemizing only helps when total itemized deductions are larger.

Other items in Publication 502 can add to the total: prescribed medicines, doctor and dental bills, insurance premiums for medical care, and a limited amount of qualified long-term care insurance premiums. For 2025, the premium limit per person is $4,810 for ages 61 to 70 and $6,020 for 71 and older.

Your parent's return or yours? Who can claim it

Publication 502 says you can generally include medical expenses you pay for yourself, your spouse or your dependent. If your parent pays from their own money, the expense belongs on their return. If you pay, you can include the expenses only if your parent was your dependent for this purpose, either when the services were provided or when you paid.

Publication 502 relaxes the usual dependent test for medical expenses. You can include medical expenses you paid for a person who would have been your dependent except that they had gross income of $5,200 or more in 2025, or filed a joint return. For a parent, the key test is usually that you provided over half of their total support for the year.

When siblings share the cost. If no one pays more than half, but together you do, a multiple support agreement can let one of you treat the parent as a dependent. Publication 502's example: four siblings each provide a quarter of a parent's support; under the agreement, one treats the parent as a dependent. Medical expenses paid by the others in the agreement can't be counted by anyone, while the sibling who claims can include what they paid themselves and weren't repaid for. Talk it through with a tax professional early in the year, and write it down. Splitting caregiving costs with siblings covers the family conversation.

Records to start keeping on move-in day

A deduction is only as good as the paperwork behind it. Start a folder, paper or digital, with:

• Monthly statements from the community that separate charges for personal care, nursing or medication services from rent and meals
• The practitioner's certification of chronic illness, with its date
• The plan of care and the community's service plan
• Proof of who paid each bill, from which account
• Pharmacy, doctor, dental, hearing aid and equipment receipts
• Insurance reimbursements received (these reduce the deductible amount)
• Any multiple support agreement between siblings

What to say to the community's business office: "For tax purposes, could you give us a year-end statement that breaks down what we paid for personal care, nursing or medication services separately from rent and meals? And can you tell me which licensed staff provide the care?"

If several family members pay, a single log of who paid what saves arguments later; tracking caregiving expenses as a family shows a simple setup.

Questions to ask a tax professional

Bring the folder above and ask:

1. Does my parent's community count as a "home for the aged or similar institution" for Publication 502 purposes?
2. Given my parent's condition, is a principal reason for being there medical care, so meals and lodging can count too?
3. Does my parent meet the chronically ill definition, and is our certification dated correctly?
4. Which document serves as the plan of care?
5. Should the expenses go on my parent's return or mine? Do I meet the support test?
6. If my siblings and I share costs, should we use a multiple support agreement, and who should claim?
7. After the 7.5% threshold, does itemizing beat the standard deduction this year?
8. How do long-term care insurance benefits or reimbursements affect the amount?
9. If the house is sold this year, how does that interact with the rest of the return?

The IRS says anyone with a Preparer Tax Identification Number can prepare returns for pay, but credentials vary. CPAs, enrolled agents and attorneys have recognized credentials, and the IRS publishes a directory of preparers with credentials. If your parent is 60 or older, the IRS Tax Counseling for the Elderly program offers free help, much of it through AARP Foundation's Tax-Aide sites.

Taxes are one part of the money picture. For the rest, see how families pay for assisted living.

Frequently asked questions

Sources

1. IRS: Publication 502 (2025), Medical and Dental Expenses (accessed Sept 2026)
2. IRS: Choosing a tax professional (accessed Sept 2026)
3. IRS: Free tax return preparation for qualifying taxpayers (accessed Sept 2026)