The Short Answer: Some Costs Are Deductible, But Only If You Meet IRS Rules
Part of what you pay a nursing home may be tax deductible as a medical expense, but only the portion that covers actual medical and nursing care — not room, board, or general living costs. The IRS allows you to deduct medical expenses that exceed 7.5% of your adjusted gross income, and nursing home care can count toward that threshold if the primary reason for being there is medical treatment or custodial care you cannot get elsewhere.
The key distinction is this: if you are in a nursing home mainly because you need skilled nursing or medical supervision, some of your bill qualifies. If you are there mainly because you need help with daily living but do not need medical care, the costs do not. Your nursing home's own accounting should break down what portion of your bill is "medical" versus "room and board," and that breakdown is what the IRS looks at.
Key Takeaways
- Only the medical and nursing care portion of your nursing home bill is potentially deductible, not the room and board portion.
- You can only deduct medical expenses if they total more than 7.5% of your adjusted gross income for the year.
- Your nursing home should provide an itemized statement showing what portion of your bill is medical care versus room and board.
- If Medicare or Medicaid covers part of your stay, you cannot deduct the portion they paid.
- Keeping receipts, the nursing home's billing statements, and documentation of why you needed the facility is essential if the IRS questions your deduction.
How the IRS Divides Nursing Home Costs
The IRS treats nursing home expenses in two categories. The medical portion includes nursing care, medications, therapy, and medical equipment provided by the facility. The non-medical portion includes room, meals, laundry, and general housekeeping — costs you would have anywhere you live.
When you pay a nursing home bill, ask for an itemized statement that breaks down these two categories. Many facilities provide this automatically; if yours does not, request it in writing. The statement should show the dollar amount allocated to medical care and the dollar amount for room and board. That medical portion is what you can potentially deduct.
If the nursing home cannot or will not provide this breakdown, you may need to contact the facility's billing department or administrator and explain that you need it for tax purposes. Some facilities have a standard percentage they use based on the resident's care plan, and they can provide documentation of that.
The 7.5% Threshold: When Your Deduction Actually Matters
Even if part of your nursing home bill is medical, you can only deduct the amount that exceeds 7.5% of your adjusted gross income (AGI) for the year. This is called the medical expense threshold.
Here is how it works in practice: if your AGI is $50,000, you can deduct medical expenses only above $3,750 (7.5% of $50,000). If your nursing home's medical portion is $4,000 for the year, you can deduct $250 ($4,000 minus $3,750). If your medical expenses total less than $3,750, you cannot deduct any of them.
This threshold means that for many people, nursing home costs do not result in a tax deduction at all — the costs straightforward do not exceed 7.5% of their income. You can calculate your own threshold before you spend time gathering documents. If your medical expenses will not exceed that 7.5% mark, there is no deduction to claim.
What Counts as Medical Care in a Nursing Home
The IRS considers these costs part of the medical portion of nursing home care: registered nurse services, licensed practical nurse services, physical therapy, occupational therapy, speech therapy, medications and injections, medical equipment (walkers, wheelchairs, oxygen), and physician visits at the facility.
Costs that do not count as medical include meals, housekeeping, laundry, utilities, television, telephone, and activities or recreation. If the nursing home provides a service that could be obtained outside the facility — such as a haircut or dental work — that cost is usually not deductible as part of the nursing home bill, though you might deduct it separately as a medical expense if it qualifies on its own.
Some costs fall into a gray area. For example, if a nursing home charges extra for a private room because the resident has a medical condition that requires isolation or monitoring, that extra charge might be deductible. If the private room is straightforward a preference, it is not. The nursing home's billing statement should clarify which category applies.
When Medicare or Medicaid Pays Part of Your Bill
If Medicare or Medicaid covers any portion of your nursing home stay, you cannot deduct the amount they paid. You can only deduct the costs you paid out of your own pocket.
This matters because many people have a mix: Medicare covers the first 100 days of skilled nursing care (with conditions), and then the resident or Medicaid pays for anything beyond that. You would deduct only your out-of-pocket share of the medical portion, not the Medicare-covered portion.
Keep records showing what Medicare or Medicaid paid and what you paid. Your nursing home's statement should show this breakdown, or you can request an explanation of benefits (EOB) from Medicare or a remittance information from Medicaid showing what they covered.
Documentation You Need to Keep
If you claim a nursing home deduction, the IRS may ask you to prove it. Keep these documents: the nursing home's itemized billing statements for each year you claim a deduction, showing the breakdown between medical and non-medical costs; receipts or cancelled checks showing what you actually paid; a copy of the resident's care plan or physician's orders explaining why nursing home care was medically necessary; and any correspondence with the nursing home about the cost breakdown.
You do not need to send these documents with your tax return, but you must have them available if the IRS requests them. The IRS is more likely to question a deduction if the amount is very large relative to your income, or if your return shows other medical deductions that seem inconsistent.
If the nursing home goes out of business or you lose your statements, keep a copy of your cancelled checks or bank statements showing the payments you made. These can serve as backup proof that you incurred the expense, even if you cannot produce the original itemized bill.
State Tax Deductions and Credits
Some states offer their own deductions or credits for nursing home costs, separate from the federal deduction. These vary widely by state and change from year to year. A few states allow a deduction for long-term care expenses that is more generous than the federal 7.5% threshold, or they offer a credit (which is often more valuable than a deduction).
Check your state's tax authority website or speak with a tax professional who knows your state's rules. If you live in a state with an income tax, it is worth asking whether you may have access to for any state-level benefit related to nursing home costs. Some states also have programs that help pay for nursing home care directly, which is different from a tax deduction but may reduce your out-of-pocket costs.
Frequently Asked Questions
Can I deduct the cost of assisted living or independent senior housing?
Not usually. The IRS only allows deductions for nursing home care where the primary reason for admission is medical necessity. Assisted living and independent senior housing are generally considered custodial care or housing, not medical care, so they do not may have access to. However, if you pay separately for medical services (like home health care) while living in assisted living, those services might be deductible on their own.
What if my parent is in a nursing home and I pay the bill — can I deduct it?
Yes, if your parent is your dependent for tax purposes. You can claim medical expenses you paid for a dependent, even if they do not live with you. Your parent must meet the IRS definition of a dependent, which includes a gross income test and a relationship test. If you are unsure whether your parent qualifies, consult a tax professional or check IRS Publication 17.
If I use long-term care insurance to pay for the nursing home, can I deduct the insurance premiums?
Long-term care insurance premiums are only partially deductible, and the amount depends on your age. The IRS sets annual limits on how much of the premium you can deduct. This is separate from deducting the actual nursing home costs. You may be able to deduct both the insurance premium (up to the age-based limit) and the out-of-pocket nursing home costs that exceed 7.5% of your AGI.
Do I need to report the nursing home deduction differently on my tax return?
Medical expenses are claimed on Schedule A (Itemized Deductions) as part of your total medical and dental expenses. You must itemize deductions rather than take the standard deduction for the nursing home costs to matter. If your standard deduction is larger than your itemized deductions, you will not benefit from the nursing home deduction.