Long Term Care Insurance may be one of the most tax-advantaged planning solutions available. Not only are benefits paid 100% tax-free, but you may also be able to deduct the premiums. See below for the 2025 tax deductible amounts updated by the IRS this week.
For individuals, the deduction is effective to the extent that the deductible premium added to taxpayer paid medical premiums and deductible out-of-pocket medical expenses exceeds 7.5% of the taxpayers AGI.
For self-employed individuals, including LLC, PA, S-corporations and partnerships, the 2% or more owners of these entities can deduct 100% of the eligible (age indexed) LTCI premiums paid on their behalf, their spouses and dependents for Tax Qualified LTCI policies. Please refer to the age indexed chart below for eligible premiums. Premiums paid on behalf of non-owner employees, their spouses and their dependents for Tax Qualified LTCI policies are generally fully tax deductible as a reasonable business expense.
| Attained Age Before Close of Tax Year | 2024 Tax Year | 2025 Tax Year | Change |
| 40 or younger | $470 | $480 | +$10 |
| 41-50 | $880 | $900 | +$20 |
| 51-60 | $1,760 | $1,800 | +$40 |
| 61-70 | $4,710 | $4,810 | +$100 |
| 71 and older | $5,880 | $6,020 | +$140 |
In regards to receiving LTCI benefits, benefits paid under a qualified LTCI plan are generally excluded from taxable income. The stated dollar amount of the per diem limitation (guaranteed tax free benefit, or reimbursed amount) is $420 for tax year 2025. In tax year 2024, the limit was $410.
For these adjustments, as well as other inflation adjustments made by the IRS, click here. (Source: IRS Rev. Proc. 2024-40)
Consumer-use tax deductibility materials from the carriers are generally available in Q1.
NOTE: Newman Long Term Care and its associates and employees do not provide legal, accounting, or tax advice. Consult your attorney or tax professional.