Long Term Care Insurance Tax Deductions
Premiums for tax-qualified LTC policies count as deductible medical expenses up to IRS age-based annual limits (for 2025: from $480 under age 40 to $6,020 for 71+), subject to the 7.5%-of-AGI medical threshold — and can be paid tax-free from an HSA within the same limits. Business owners often deduct far more.
The age-based limits
The IRS caps how much LTC premium counts as a medical expense, indexed annually (2025 figures shown — confirm the current year at irs.gov):
| Age at year end | 2025 deductible limit |
|---|---|
| 40 or under | $480 |
| 41–50 | $900 |
| 51–60 | $1,800 |
| 61–70 | $4,810 |
| 71+ | $6,020 |
For itemizers, the capped premium joins other medical expenses and is deductible to the extent the total exceeds 7.5% of adjusted gross income — a threshold many retirees do cross once premiums and care costs stack up.
Three routes that beat itemizing
- HSA dollars: pay premiums tax-free from a Health Savings Account up to the same age-based limits — effectively a deduction with no AGI threshold
- Self-employed: deduct premiums (within the limits) as self-employed health insurance — no itemizing, no 7.5% floor — including for a spouse
- C-corporation owners: the standout — a C-corp can generally deduct 100% of LTC premiums for employees (including owner-employees) without the age caps, and the benefit isn't taxable income. S-corp >2% owners deduct within the age limits
Only “tax-qualified” policies count — virtually everything sold today qualifies under IRC §7702B, but verify the label on any older policy. Benefits paid from qualified policies are income-tax-free (per-diem policies within the IRS daily cap). State credits stack on top in many states — and confirm current-year figures with your CPA.
Related planning: partnership asset protection and the premium structure differences of hybrid policies, whose premiums are generally not deductible.
Frequently asked questions
Are long term care insurance premiums tax deductible?
Can I pay long term care premiums from my HSA?
Are long term care insurance benefits taxable?
Do states offer their own LTC tax breaks?
Ready for real numbers? Premiums vary widely by age, health, and state. Comparing personalized quotes from multiple carriers is the only way to know what you'd actually pay.
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