Since it’s tax season once again, many caregivers of our clients who are residents of an assisted living facility inquire about the tax deductibility of assisted living costs. The IRS provides rules for deducting certain qualified long-term care costs as medical expenses. Normally, the costs of nursing home care may be deductible, but the status of Assisted Living Facility (ALF) costs has not always been as clear. This article explains assisted living facility costs as tax deductions and how IRS rules may apply to residents and their caregivers.
For ALF residents, qualified long-term care costs are “necessary rehabilitative services, maintenance or personal care services that are (1) required by a chronically ill individual, and (2) provided pursuant to a plan of care by a licensed health care practitioner.”
The ALF resident must first qualify as a chronically ill individual. The resident can meet this definition if, within the previous 12 months, a licensed healthcare practitioner certifies that the resident meets one of the following:
Maintenance or personal care services provide assistance for a chronically ill individual with his or her disabilities. Therefore, if an ALF resident needs help with two ADLs, the assistance provided by the ALF generally qualifies as personal care services. Likewise, if the ALF protects the individual from safety and health threats due to severe cognitive impairments, the assistance provided by the ALF may also qualify as personal care services.
The certification of the chronic illness requirement must be done within the preceding 12 months. The certifying licensed care practitioner can be a physician, registered professional nurse, or licensed social worker. This practitioner does not have to be an employee of the ALF (although the practitioner could be). The licensed care practitioner must personally examine the resident and provide a written opinion. Ideally, the opinion should be obtained prior to admission to the ALF.
The plan of care is not specifically defined within the Internal Revenue Code. Federal statutes require that nursing facilities have a written plan of care for each resident. Although written care plans for ALFs are not required by federal statutes, most ALFs prepare them.
The plan of care must be prepared by a licensed care practitioner, and it should be prepared at or as soon after admission to the ALF as possible.
If the requirements above are satisfied, then 100% of the costs of the ALF (including room and board) may be deductible on the resident’s Form 1040, Schedule A, to the extent the costs are not reimbursed by government benefits or insurance.
For 2025 taxes, the resident can claim an itemized deduction for unreimbursed medical expenses to the extent that such expenses exceed 7.5% of adjusted gross income. These expenses include qualified long-term care expenses, as well as eligible insurance premiums and other qualifying medical expenses.
If the resident does not meet the IRS requirements, the resident may still be able to deduct a portion of ALF costs attributable to nursing services. In that case, room, board, and personal services costs generally would not be deductible.
The ALF should be able to provide an estimate of the portion of its costs attributable to nursing services, and the taxpayer can attach that statement to Schedule A. Typically, 30% to 40% of ALF costs are for nursing services (though this can vary).
Long-term care decisions often overlap with financial planning and legal planning. If your family is navigating assisted living costs, it may help to coordinate your documentation and care plan with your broader goals. Our team frequently assists families with:
Questions about accessing and paying for long-term care?
Call our office at 239-434-8557. One of our intake specialists can explain how our firm works with families in your situation.
Disclaimer: This article is for general informational purposes only and does not constitute legal or tax advice. Tax rules may change and individual circumstances vary. Consider speaking with qualified legal and tax professionals regarding your specific situation.