Yes, most nursing home expenses can be deducted on a federal tax return. When a person is in a nursing home for medical reasons, their room and board, medications, medical care and supplies, durable medical equipment, physical and occupational therapy services, and transportation to medical appointments are considered deductible medical expenses. If you’re claiming your loved one as a dependent on your tax return, you may be able to deduct some of their nursing home costs. Most states also offer a medical expense deduction, but the rules vary. When in doubt, always consult a tax professional.
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In most cases, the cost of being in a nursing home is considered a medical expense and is deductible on a federal tax return. The IRS defines medical expenses as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body.”[01,02]
Medical expenses include, but aren’t limited to, the following:[01]
You can claim your own and your dependents’ unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). Your AGI is your gross income minus any adjustments.[03] To qualify as a dependent on your federal tax return, a person must meet all these requirements:
The IRS also requires that the person was your dependent either at the time they received the medical services or at the time you paid for them.[01]
You may still be able to deduct your loved one’s medical expenses if you can’t claim them as a dependent for one of the following reasons:
You can deduct 100% of the medical expense portion of nursing home care that exceeds 7.5% of your AGI. For example, if your adjusted gross income is $38,000, you can claim the entire amount of medical expenses that exceed $2,850. Medically necessary nursing home care is often covered at least in part by Medicare, Medicaid, long-term care insurance, and/or veterans benefits. Only the unreimbursed and out-of-pocket expenses for this care are tax deductible, such as copays and coinsurance.
Yes, Medicaid beneficiaries must file taxes even though most won’t owe any taxes. People who receive Medicaid only need to pay taxes on the amount of income that exceeds their state’s annual Medicaid income threshold. For instance, if the annual Medicaid income limit in your loved one’s state is $13,000, any income they receive above $13,000 is taxable. Each state has a different income limit.
Filing a tax return can also reduce the likelihood that someone else can fraudulently file using your loved one’s name. If you’re not sure whether your loved one’s income is taxable or if they need help filing, consider speaking with a CPA tax preparer or using a free online tax service.
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Yes, you must itemize deductions on Schedule A (Form 1040) to claim the medical expense deduction. That said, it’s a good idea to first determine which is more financially beneficial: itemizing deductions that include medical expenses or taking the standard deduction that doesn’t include medical expenses.
“If someone’s medical expenses are likely not going to be more than 7.5% of their adjusted gross income, then it may not be worth keeping track for tax deduction purposes,” says Chad Holmes, a CERTIFIED FINANCIAL PLANNER™ (CFP®), a CPA, and the founder of Formula Wealth, a financial planning firm.
On the other hand, “if itemizing your deductions lowers your taxable income by more than a nominal amount than taking the standard deduction, then it lowers your tax liability and is therefore worth doing,” Holmes notes.
As with any major financial or legal decision, consider consulting with an accountant or tax attorney about the tax implications of taking the medical expenses deduction.
Tax deductions and tax credits sound similar, but they aren’t the same.
“A credit reduces your tax liability dollar for dollar, while a deduction reduces your taxable income,” Holmes explains. “[A deduction] reduces your tax liability by the percentage of your tax bracket.”
Keep in mind that you can take the standard deduction one year and itemize deductions the next year. For example, if your dependent moves into a nursing home in December, you’ll only have one month’s worth of expenses that year, so it may be better to take the standard deduction. In the following year, you’d be able to claim 12 months of expenses, so you may pay less in taxes if you itemize and deduct eligible medical expenses.
If you’re planning to take the medical expenses tax deduction, it’s a good idea to track expenses throughout the year.
“I am a spreadsheet kind of guy. Many people would rather a hospital stay over working in Excel,” Holmes jokes. “If you hate Excel, don’t choose that. Whatever you’re comfortable with is best.”
Some other tracking options available include Quickbooks or Intuit Mint. Whatever tracking solution you choose should make it easy to track or audit expenses and cash flows. It should also provide a way to organize your receipts.
Your medical providers may provide an online patient portal or billing system that enables you to view bills from the convenience of your phone or computer.
You may be able to find simple answers through the IRS’ Interactive Tax Assistant. However, more complex questions should be directed to an elder law attorney, a tax attorney, a tax accountant, a financial advisor, or some other financial expert. In some cases, you may want to consult with multiple experts to learn your options and make an informed decision.
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Typically, nursing homes are a good fit for people who have a terminal illness, a serious chronic condition, or a serious progressive illness. They provide a level of medical care not offered at an assisted living or memory care community. See the table below for key differences in services and cost between nursing homes and other types of care.
| Service | Home care | Independent living | Assisted living | Memory care | Nursing home |
|---|---|---|---|---|---|
| Help with ADLs | Yes | No | Yes | Yes | Yes |
| Medication management | Yes | No | Yes | Yes | Yes |
| Dementia care | Yes | No | Maybe | Yes | Yes |
| Pets allowed | Yes | Yes | Yes | No | No |
| Emergency services on-site | No | No | Yes | Yes | Yes |
| Median cost per month | $2,600* | $3,145 | $5,190 | $6,450 | $8,669-$9,733[02] |
* — Based on the national median cost of $30 per hour for 20 hours of care per week.
It can feel like an overwhelming challenge to locate senior care options, but you don’t have to go on this journey alone. The compassionate Senior Living Advisors at A Place for Mom can help you learn about the care options available to your loved one. They can help you find affordable local options and even set up community tours for you — all at no cost to you or your family.
Yes, most people should file a tax return. If you are your loved one’s financial power of attorney , you may be able to help them with this or file their taxes on their behalf.
Yes, if your loved one’s health care provider has ordered dementia care as part of a treatment plan, their dementia care is a deductible medical expense regardless of where it’s provided.
Yes, skilled nursing care services are eligible for the medical expense deduction. These services may be provided in a nursing home, a hospital, or another setting.
If a short-term nursing home stay is covered by Medicare, Medicaid, or veterans benefits, it’s not deductible. Only unreimbursed expenses qualify for the medical expense deduction.
Internal Revenue Service. (2024, November 18). Publication 502, medical and dental expenses.
Internal Revenue Service. (2024, October 8). Medical, nursing home, special care expenses.
Internal Revenue Service. (2025, January 16). Definition of adjusted gross income.
CareScout.com. (2024). Genworth cost of care survey.
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