Are Nursing Home and Assisted Living Costs Tax Deductible? (2025 IRS Rules)

Nursing home and assisted living costs are among the largest medical expenses many families face — often $60,000–$120,000 per year or more. Whether and how much of these costs you can deduct depends on the type of facility, the primary reason for the placement, and who is paying. Here’s what the IRS allows in 2025.

The Key Question: What Is the Primary Reason for the Placement?

The IRS uses a “primary reason” test to determine how much of a care facility’s cost is deductible as a medical expense:

If the primary reason for being in the facility is medical care, then the entire cost of the facility — including room, board, meals, and medical services — is potentially deductible as a medical expense.
If the primary reason is personal (custodial care, convenience, social engagement), then only the medical services portion of the facility costs is deductible — room, board, and other non-medical services are not.

Nursing Homes: Usually Fully Deductible

Skilled nursing facilities (SNFs) and nursing homes that provide continuous medical care and skilled nursing services typically satisfy the “primary reason is medical care” test. When a person is in a nursing home primarily because they require skilled nursing care, physician oversight, wound care, physical rehabilitation, or similar medical services, the full cost of the facility is generally deductible as a medical expense.

This includes the room and board costs, meals, and the medical services themselves — all wrapped into one deductible amount. Given nursing home costs of $8,000–$12,000 per month in many areas, this can be an enormous deduction.

Assisted Living: Depends on the Level of Care

Assisted living facilities present more complexity because they range from essentially independent living with minimal services to near-nursing-home levels of care. The deductibility analysis depends on why the individual is there:

When the Entire Cost May Be Deductible

If the primary reason a person is in assisted living is medical — for example, they have severe dementia, significant cognitive impairment, or multiple chronic conditions requiring constant assistance — the full cost of the facility may be deductible. IRS guidance specifically recognizes that the cost of maintaining a chronically ill individual in a licensed residential care facility (meeting the definition under section 7702B) can be fully deductible when medical care is the primary purpose.

When Only Medical Services Are Deductible

If a person is in assisted living primarily for personal reasons — they want help with activities of daily living but are otherwise in good health, or they’re living in a community for social reasons — then only the actual medical services they receive are deductible. The room, board, and accommodation charges are personal expenses.

In practice, the facility should be able to provide a breakdown of charges for medical versus non-medical services, which you can use to determine the deductible portion.

Memory Care Facilities: Strong Case for Full Deductibility

Memory care facilities specifically designed for individuals with Alzheimer’s disease, dementia, and other cognitive impairments present one of the clearest cases for full deductibility. When someone is in a memory care unit because of a medical diagnosis requiring specialized supervision and care, the primary reason is medical. The IRS has recognized that expenses for a chronically ill individual requiring substantial supervision due to severe cognitive impairment can be fully deductible.

Who Can Claim the Deduction: The Dependent Rule

If you’re paying for a parent’s or other family member’s nursing home or assisted living costs, you can deduct those costs — but only if the person qualifies as your dependent for tax purposes. To be a qualifying relative dependent, generally the person must:

Receive more than half of their financial support from you
Have gross income below $5,050 (2025)
Not file a joint tax return with a spouse

Note that the gross income test uses gross income from taxable sources. Social Security benefits may or may not be included depending on the individual’s total income situation.

Multiple Siblings Sharing the Cost

When several siblings share the cost of a parent’s care, the family can use a Multiple Support Agreement (Form 2120). Under this arrangement, even if no single sibling provides more than half the support, the group collectively providing more than half can designate one person to claim the dependency exemption each year. Each person can deduct the nursing home costs they personally paid — regardless of who holds the dependency exemption that year.

The 7.5% AGI Threshold Applied to Large Facility Costs

With nursing home costs running $100,000+ per year in many areas, the deductible amount (after the 7.5% AGI floor) can be enormous. If your AGI is $80,000 and you paid $90,000 for a parent’s nursing home care in a year when they qualified as your dependent, your deductible medical expenses are $83,000 ($90,000 minus $6,000 floor). That would eliminate most or all of your taxable income.

Of course, to get this benefit, you must itemize — and with that level of medical expenses, itemizing will easily beat the standard deduction.

Long-Term Care Insurance Benefits and Nursing Home Costs

If long-term care insurance pays for some of the nursing home costs, you can only deduct the amount you actually paid out of pocket — not the portion covered by insurance. Additionally, if your long-term care insurance benefits were paid tax-free to you (which is usually the case), those amounts cannot be deducted as medical expenses.

Documentation You’ll Need

To support your deduction, gather: facility invoices breaking down costs (especially for assisted living where only some costs may qualify), records of payments made, documentation of the medical condition requiring the level of care (physician statements, care plans, diagnoses), evidence of the dependency relationship, and records confirming the facility is licensed to provide medical care.

The Bottom Line

Nursing home costs are generally fully deductible when medical care is the primary reason for placement. Assisted living costs are fully deductible when the primary reason is medical care (as in memory care or high-acuity assisted living) and only partially deductible otherwise. For adult children supporting an elderly parent in a care facility, the combination of these deductions — when the parent qualifies as a dependent — can be among the largest itemized deductions available. The interaction of nursing home costs, long-term care insurance, and the tax code is complex enough that working with a tax professional is often worthwhile in these situations.