What Is The $5000 Caregiver Tax Credit?
According to statistics, unpaid caregivers perform approximately $600 billion worth of work per year. The average caregiver’s yearly expenses for providing care are $7,200. Many caregivers struggle financially because of these costs and because providing care limits their ability to work and earn.
Lawmakers have introduced a bill that would help remove some of this financial burden. The Credit for Caring Act has been introduced in the House of Representatives and Senate and has bipartisan support.
In this article, we’ll talk about the bill, what it means for family caregivers, and how likely it is to pass.
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What Is The Credit For Caring Act?
This caregivers act, officially known as the Credit for Caring Act, is a bill introduced to Congress that would provide up to $5,000 in federal tax credits for eligible caregivers.
The bill was introduced in 2024 and reintroduced in 2025. It has bipartisan support and is sponsored by Senators Shelley Moore Capito (R-WV) and Michael Bennet (D-CO), as well as Representatives Linda Sánchez (D-CA) and Mike Carey (R-OH).
If passed into law, the Act would provide qualifying family caregivers with a credit of up to $5,000 per tax year, which would be adjusted annually for inflation. The credit would cover 30% of eligible expenses once the total costs exceed $2,000.
Qualifying caregivers provide home care and work, earning at least $7,500 per year. Working caregivers earning $125,000 or more per year in taxable income ($200,000 or more for joint filers) will not be eligible for the taxpayer credit.
How The Credit For Caring Act Helps Caregivers & Families
Caregiver support is important because the role is stressful for many reasons. Family caregivers often balance their caregiving responsibilities with work. They watch their loved one’s health decline and worry about their well-being. Most family caregivers have no formal training for the home care role. They often feel overwhelmed or incapable of providing the best personal care.
On top of these factors, many caregivers face financial stresses. Caring for someone with a disability or chronic illness can be costly. Expenses include:
Nearly 50 million Americans act as family caregivers. The new bill, if passed, would help relieve one of the stresses of the role. The credit can help offset many of the costs caregivers pay out of pocket. Unpaid family caregivers spend an average of $7,200 yearly on related costs. Those caring for a loved one with dementia spend even more, $12,388 on average.
A credit is important for a caregiver and their care recipient’s finances, but it has ripple effects as a type of caregiver support. Worrying less about money allows a caregiver to spend more energy providing good care. It can also improve the caregiver’s well-being and mental health, reducing stress and the risk of caregiver burnout.
Will The Credit For Caring Act Pass?
The AARP has been working with lawmakers for years to develop and introduce a bill to provide financial support for caregivers. The first bill introduced in 2024 didn’t move past the committee stage, but the sponsors are hopeful for the reintroduced 2025 bill.
The sponsors and AARP feel that the time is right for this bill to pass into law. President Trump voiced support for a caregiver credit on the campaign trail, and more than 100 organizations signed a letter supporting the current bill.
Some states have already passed laws providing tax relief for family caregivers. Oklahoma’s Caring for Caregivers tax credit became law in 2023. It provides up to $3,000 per year in tax credits for eligible caregivers.
Nevada, Georgia, Missouri, Maryland, and New Jersey also have caregiver tax credits or reimbursement programs. These state laws, which were passed recently, indicate that the federal bill could also be passed into law this time.
There is also broad public support for a caregiver tax credit. According to an AARP poll, 84% of respondents support it. The support is consistently high regardless of political affiliation. Most respondents also believe that ordinary, working people deserve tax breaks before the wealthy and corporations. With support from voters, lawmakers are more likely to pass the bill.
Other Tax Breaks & Financial Assistance
The Credit for Caring is an important bill that could make a huge difference for individuals and families struggling with home care costs. However, it’s not a law yet. It could be years before it benefits family caregivers.
Fortunately, there are other sources of financial assistance, including tax credits for which many informal caregivers are eligible:
- The child and dependent care credit applies to people caring for qualifying dependents who are also care recipients. This includes adult family member dependents who cannot take care of themselves.
- The dependent tax credit is for people caring for an adult who is permanently and totally disabled.
- The head-of-household credit helps individuals who provide more than half the cost of a household, and helps with a disabled family member.
Not all caregiving situations qualify for these credits, but other sources of assistance are also available. Paid family leave can allow you to take a short time away from work, although it does not cover long term care. If you don’t qualify for paid family leave, your care recipient’s long term care insurance, if they have it, can help cover expenses.
If you have a job with benefits, you can use a flexible spending account or a health savings account. These allow you to set aside and use pre-tax contributions for qualifying home care costs.
If your care recipient qualifies for Medicare or Medicaid, these programs can help cover costs. You may even qualify to be paid to be a family caregiver through Medicaid self-directed care programs.
You can also turn to state-level resources or non-government sources of funding. Charitable organizations provide assistive or mobility devices, respite care services, other support services, and grants to help family caregivers.
Caregiving is a rewarding and necessary job, but it can be challenging. The new Credit for Caring bill is poised to make the job easier by removing some financial burden. Contact your representatives to show your support for it.
Key Takeaways
- The proposed Credit for Caring Act could provide up to $5,000 in federal tax credits for eligible family caregivers to help offset significant out-of-pocket caregiving expenses.
- The bill has bipartisan support in Congress and is backed by organizations like the AARP, with strong public support for such a credit.
- While the Credit for Caring Act is not yet law, other existing tax credits and financial assistance programs can help caregivers with expenses, including the Child and Dependent Care Credit, the Dependent Tax Credit, and options like Medicaid programs.
References
- USA Today. (2025, March 11). Family caregivers spend $7,200 a year. This proposed federal tax credit could help.
- Capito, S. M. (n.d.). Capito reintroduces Credit for Caring Act.
- AARP. (n.d.). The Credit for Caring Act.
- Alzheimer’s Impact Movement. (n.d.). Credit for Caring Act.
- Tax Notes. (2024, October 28). Trump proposes tax credit for family caregivers.
- Oklahoma House of Representatives. (2024, January 2). Caring for Caregivers Act Takes Effect.
- AARP. (2025, February 11). AARP Poll: Voters Overwhelmingly Support Caregiver Tax Credit
