What qualifies as a medical expense for assisted living?

Qualified long‑term care services include nursing care, medication management, dementia care, and assistance with activities of daily living prescribed by a licensed medical professional.

Are room and board costs deductible?

They may be deductible only if considered medically necessary and part of a physician-prescribed care plan.

How does Arizona treat these deductions?

Arizona generally follows federal rules, but deductions must be itemized and expenses reimbursed by insurance, Medicare, Medicaid, or ALTCS cannot be included.

Are Assisted Living Expenses Tax-Deductible in Arizona?

Q: Are assisted living expenses tax‑deductible in Arizona?

Yes, certain assisted living expenses are deductible as medical expenses under IRS Publication 502 if they aren’t reimbursed and exceed 7.5% of your adjusted gross income.

Q: Who can claim the deduction?

Either the senior, if filing independently, or a caregiver who meets IRS dependent rules and pays the qualifying expenses directly.

Healthcare costs are a consistent concern for Americans, especially considering they continue to rise. In 2023 alone, healthcare costs rose 7.5%, reaching $4.9 trillion. Keep reading to learn how you can save as much money as possible when it comes to filing your taxes.

Understanding Tax Deductions for Assisted Living in Arizona

When writing off expenses, it’s essential to understand which expenses qualify as tax-deductible, and which do not. In the end, it could be best to get assistance from a tax-deductible assisted living facility in Arizona. However, knowing the ins and outs first can only be helpful.

Can You Deduct Assisted Living Costs?

Yes, but there are stipulations. It’s also important to distinguish between medical vs. non-medical expenses, as it can get confusing because not all things that assist with better health qualify as a “medical expense.”

What Does the IRS Say About Medical Expense Deductions?

According to Publication 502 from the IRS, you can only deduct qualified medical or dental care for the year you are filing (not the expenses you expect to pay the next year).

The IRS’s Publication 502 and the 7.5% Rule

Per Publication 502 from the IRS, you can only deduct qualified medical or dental expenses once they exceed the amount that is equal to 7.5% of your adjusted gross income. A qualified medical expense is defined as a medical expense that was for diagnosing, alleviating, curing, treating, or preventing a disease that is “affecting any part or function of the body.”

This includes:

Legal medical services that were provided by physicians, surgeons, dentists, and other medical personnel.
The premiums you paid that covered the expenses paid for medical care.
Expenses for medical care and transportation expenses for receiving this care.
Expenses paid for qualified long-term care services.

Examples

Non-medical services:

Herbal remedies
Vitamins
Vacations for stress relief
Cosmetic surgery

Medical services:

Costs for prescription drugs and insulin
Medically ordered lab fees
Physical examinations
Hospital services
Non-cosmetic surgeries
Qualified long-term care services

Assisted Living as a Deductible Medical Expense

Qualified long-term care services: These are defined as care that is necessary for diagnosing, preventing, managing, treating, and/or curing a chronic condition, or maintaining personal care services for a chronically ill patient. This means that the costs of qualified long-term care services are completely deductible if the resident is chronically ill and is following a care plan prescribed by a licensed medical practitioner.
Maintenance for personal care services: This includes required assistance with individual disabilities for chronically ill patients. This includes supervision if the patient suffers from cognitive impairment, such as dementia.

How Arizona Treats These Deductions

According to the Arizona Department of Revenue, Arizona generally conforms to federal guidelines. However, itemization of the deductions is required, and you must reduce the expenses that have been paid by insurance coverage, Medicare, Medicaid, or another source. You also cannot include the amount you paid for your health insurance plan unless your employer puts these totals in Box 1 of your Form W-2.

Which Assisted Living Expenses May Be Deductible?

In most cases, you cannot deduct all assisted living expenses as they will not all qualify as a “medical expense.”

Eligible Expenses

Nursing services
Medication management
Assisted living services that help with activities of daily living (ADL)
Dementia/memory care
Room and board (if deemed medically necessary)

Non-Eligible Expenses

Housekeeping services
Meals
Recreational activities
Rent (exemption: may be covered if it is tied to medically necessary care)

Who Can Claim the Deduction — Seniors or Family Caregivers?

If a senior is filing their taxes independently, they can claim the deductions by itemizing. A family caregiver can claim the deductions if:

The patient is considered a dependent (even if living in a long-term care facility).
The caregiver paid the expenses directly.

According to the IRS, for a patient to be considered a dependent, they must meet the following criteria:

They must be a U.S. citizen, resident alien/national, or a resident of Canada or Mexico.
Only claimed as a dependent on a single tax return.
A dependent cannot claim a dependent on their tax return.
Spouses cannot claim their spouse as a dependent when filing jointly.
Must be a qualifying relative.

Tips for Maximizing Your Deduction and Avoiding Mistakes

The best thing you can do to maximize your tax deduction while avoiding mistakes is to visit a certified public accountant (CPA) who is familiar with eldercare. Before your visit, it is important to acquire the following documents:

Detailed receipts and documentation of medical services (including proof of payments).
A record of mileage and receipts for travel expenses to medical appointments.
Written care plan(s) from your physician for chronic illness verification.
Documentation from your insurance company.
Separate medical vs. non-medical costs for a professional opinion on each.

Common Misconceptions

“All assisted living is deductible.” — This is incorrect. To qualify for a deduction, an assisted living facility must be a qualified long-term care facility (see above).

“If you pay, you can deduct it.” — This is only true if the dependent status applies (see above). Also, even if you qualify for dependent status, you must meet the 7.5% of your adjusted gross income rule (see above).

“You can deduct your gym membership because it benefits your health.” — Incorrect. Gym memberships can only be deducted in rare cases when they’re part of a medically necessary treatment plan.

Final Thoughts: Navigating Tax Deductions With Trusted Support

Navigating your taxes with medical expenses can be taxing (pun intended). However, there are so many services out there that can help with assisted living expenses. For example, in Arizona, Haven Health has the experience necessary for supporting Arizona families. At Haven Health, you will find compassionate staff who are ready to help you and your family with planning care, local referral support, and answer all your questions about paying for assisted living.

Need help planning for assisted living in Arizona? Contact Haven Health for expert care guidance and financial resources tailored to your family’s needs.

Sources:

Dependents. (2025).
Publication 502 (2024), Medical and Dental Expenses. (2024).
Trends in Health Care Spending. (2025).
2023 Form 140PY Schedule A(PY) Itemized Deductions. (2024).