Yes, premiums for a federally qualified long-term care insurance policy are tax deductible, but the amount you can actually deduct is capped by your age and further limited by how you file. For 2026, the eligible premium runs from $500 if you’re 40 or younger to $6,200 if you’re over 70.1Internal Revenue Service. Revenue Procedure 2025-32 Whether any of that produces real tax savings depends on whether you’re self-employed, whether you itemize, and how your medical expenses compare to your adjusted gross income.
The Policy Has To Be Qualified
Only contracts that meet the federal definition of a “qualified long-term care insurance contract” under Internal Revenue Code Section 7702B are deductible at all. Policies issued before January 1, 1997 are generally grandfathered. Newer contracts have to meet several structural rules: the only insurance protection can be for long-term care services, the policy must be guaranteed renewable, it can’t build cash value or be borrowed against, any refunds or dividends must reduce future premiums or increase benefits rather than pay out in cash, and the coverage can’t duplicate Medicare except where Medicare is the secondary payer.2Office of the Law Revision Counsel. 26 USC 7702B – Treatment of Qualified Long-Term Care Insurance
If your policy doesn’t meet these requirements, the premiums aren’t deductible at any level. Benefits from a non-qualified policy are generally not taxable as income either, so the trade-off is you lose the premium deduction but don’t face a tax bill later.
How Much of the Premium Counts (2026 Age Limits)
Even with a qualified policy, you can’t deduct the full premium. The IRS caps the amount that counts as a medical expense based on your age at the end of the tax year. Anything paid above the cap simply doesn’t count. The limits apply per person, so a married couple with two policies each gets their own cap.
For 2026:1Internal Revenue Service. Revenue Procedure 2025-32
- Age 40 or under: $500
- Age 41 to 50: $930
- Age 51 to 60: $1,860
- Age 61 to 70: $4,960
- Age 71 or older: $6,200
A 65-year-old paying $5,500 per year for a qualified policy can only count $4,960 of that toward medical expenses. The remaining $540 is gone from a tax standpoint. And the $4,960 itself still has to clear the AGI hurdle described below before it reduces the tax bill.
If You’re an Employee or Retiree, You Have To Itemize
For anyone who isn’t self-employed, the eligible premium goes on Schedule A along with other unreimbursed medical expenses. You can only deduct the portion of total medical costs that exceeds 7.5% of your adjusted gross income.3Internal Revenue Service. Publication 502 (2025) – Medical and Dental Expenses With an AGI of $100,000, the first $7,500 of medical expenses produces zero deduction. Someone with $6,000 in total medical costs, including the LTC premium, gets nothing.
There’s a second barrier that stops most people cold: you have to itemize in the first place. The 2026 standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.4Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026 Itemizing only helps when medical expenses, state and local taxes, mortgage interest, and charitable contributions together exceed that amount. For a lot of taxpayers, especially younger ones with small age-based caps, the LTC premium isn’t nearly enough on its own.
If You’re Self-Employed, the Rules Are Better
Sole proprietors, partners, LLC members taxed as partnerships, and more-than-2% S corporation shareholders can deduct eligible LTC premiums as part of the self-employed health insurance deduction. This is above the line: it reduces adjusted gross income directly, doesn’t require itemizing, and isn’t subject to the 7.5% AGI floor.5Internal Revenue Service. Topic No. 502 – Medical and Dental Expenses
The deduction is still limited to the lesser of what you paid or the age-based cap, and it can’t exceed your net self-employment income from the business. If the business earns $3,000 and the eligible premium is $4,960, you’re capped at $3,000. Anything you can’t deduct above the line can still go on Schedule A if you itemize.
A restriction catches people off guard: you can’t claim the deduction for any month you were eligible to participate in a subsidized health plan through your own employer or your spouse’s employer, even if you didn’t enroll. The IRS applies this rule separately for long-term care coverage and other health coverage, so being eligible for your spouse’s medical plan doesn’t necessarily block the LTC deduction if that plan doesn’t include long-term care benefits.6Internal Revenue Service. Instructions for Form 7206
S Corporation Shareholders
More-than-2% S corporation shareholders follow a specific procedure. The S corporation pays the LTC premiums and reports them as wages on the shareholder-employee’s W-2 in Box 1. Those wages are subject to income tax withholding but not Social Security or Medicare taxes. The shareholder then claims the self-employed health insurance deduction on their personal return to offset the added income.7Internal Revenue Service. S Corporation Compensation and Medical Insurance Issues If the premium isn’t run through payroll and reported on the W-2, the above-the-line deduction is off the table.
C Corporations
C corporations get the most favorable treatment. The corporation can deduct 100% of the premium it pays for any employee’s qualified long-term care policy as an ordinary business expense.8Office of the Law Revision Counsel. 26 USC 162 – Trade or Business Expenses The employee, including an owner-employee, excludes the premium from gross income as an employer-provided health benefit.9Office of the Law Revision Counsel. 26 USC 106 – Contributions by Employer to Accident and Health Plans The age-based limits that restrict individuals and self-employed taxpayers don’t cap the corporation’s deduction, and the benefit can be provided selectively without offering it to every employee.
Paying Premiums Through an HSA
If you have a Health Savings Account, you can use it to pay qualified long-term care insurance premiums tax-free. This is one of the few types of insurance premium HSAs are allowed to cover. The same age-based limits apply: withdrawals up to $500 (age 40 or under) through $6,200 (age 71+) per year for LTC premiums come out untaxed.10Internal Revenue Service. Publication 969 – Health Savings Accounts and Other Tax-Favored Health Plans
This route matters for people who take the standard deduction and can’t use Schedule A. It also matters when you’re young enough that the age-based cap is small; running the premium through an HSA may be the only way to get any tax benefit at all.
Hybrid Life-LTC Policies
Hybrid policies that combine life insurance or annuity features with long-term care coverage are common, and their tax treatment is narrower than a standalone policy’s. For any part of the premium to be deductible, the contract has to break out the long-term care component as a separately identifiable premium. The life insurance portion is never deductible. Only the amounts specifically allocated to LTC acceleration benefits, extension benefits, and inflation protection count, and those are still subject to the age-based caps and the same itemizing or self-employed rules.
State Tax Incentives
A number of states offer their own tax credits or deductions for long-term care insurance premiums on top of the federal benefit, and the rules vary widely. Some states give a flat credit; others allow a deduction that either follows the federal caps or sets its own. These incentives change frequently and only matter if you have state income tax liability. If your federal deduction is squeezed by the AGI floor or by taking the standard deduction, a state benefit may be the meaningful piece of the picture, so check your state’s current rules before writing off the tax value of a policy.