Credit for Caring Act of 2025

This bill creates a new federal tax credit to help people who work and also care for a family member with long-term needs. You can claim 30% of your eligible caregiving costs that are over $2,000, up to $5,000 per year. The $5,000 cap will go up with medical cost inflation after 2025. To qualify, you must earn more than $7,500 in the year and pay expenses to care for a spouse or close relative who has a certified long-term condition lasting at least 180 days; a licensed health professional must provide the certification, and you must list the family member’s taxpayer ID and the professional’s ID on your tax return . The rules also cover children with serious needs, with special standards for ages under 6.

Covered costs include help from paid caregivers; supervision; devices and technology (including remote monitoring); home changes; medication management; transportation; incontinence supplies; coordination of services; respite care; caregiver counseling, training, or support groups; certain travel costs; technologies that help you provide care; and even lost wages for unpaid time off. You must keep records. Some costs don’t count if you already used other tax breaks for them, and contributions to ABLE accounts do not qualify. The credit gets smaller as income rises: it is reduced by $100 for each $1,000 your income is over $150,000 for joint filers or $75,000 for others, with these amounts adjusted for inflation after 2025.

Key points

• Who is affected: Working family caregivers with at least $7,500 in earned income caring for a spouse or close relative with certified long-term needs (special rules for young children) .
• What changes: New tax credit equal to 30% of eligible costs above $2,000, up to $5,000; wide range of caregiving expenses qualify; documentation and ID reporting required; credit phases out at higher incomes; no double-counting with other tax breaks; ABLE contributions don’t qualify .
• When: The $5,000 cap and income thresholds are adjusted for inflation after 2025; the care certification must be made within 39 months before your filing due date .