Sponsors (8)
The bill provides targeted tax relief to working family caregivers and helps pay for a broad set of caregiving supports, but its nonrefundable nature, caps, and documentation/privacy requirements limit help for the poorest and highest-cost caregivers and may create administrative barriers to claiming the credit.
Working family caregivers (especially lower- and middle-income taxpayers) can reduce their federal tax owed by claiming a credit equal to 30% of qualifying care expenses above $2,000 (up to $5,000), with income phaseouts that target assistance to those under the specified AGI thresholds.
Families providing care, including those supporting people with disabilities, can use the credit to pay for a wide range of supports (respite, counseling, assistive technology, direct care, home modifications), making diverse caregiving costs more affordable.
Eligible caregivers may use the medical standard mileage rate for caregiver travel, simplifying recordkeeping and potentially increasing reimbursement value for travel-related caregiving costs.
Very low-income caregivers with little or no federal income tax liability will get limited or no benefit because the credit is nonrefundable, reducing relief for the poorest caregivers.
Families with high long-term care expenses will still face substantial out-of-pocket costs because the credit is capped at $5,000 annually and applies at a 30% rate, limiting the credit's ability to cover high care costs.
Taxpayers must provide the care recipient's name and TIN and the certifying practitioner's ID to claim the credit, creating privacy concerns and potential reluctance to claim the benefit.
Based on analysis of 2 sections of legislative text.
Introduced March 11, 2025 by Shelley Moore Capito · Last progress March 11, 2025
Creates a nonrefundable tax credit for working family caregivers equal to 30% of qualifying long‑term care expenses paid in a year above $2,000, with a maximum credit of $5,000 per year (indexed for inflation after 2025). To claim the credit, caregivers must have earned income above $7,500, incur qualifying expenses for a certified care recipient (spouse or qualifying relative) who has long‑term care needs for at least 180 consecutive days, and provide documentation and practitioner certification on their tax return. The credit phases out for higher earners and applies to tax years beginning after December 31, 2024. Qualified expenses are narrowly defined to cover direct care, assistive technologies, environmental modifications, transportation and other supports for activities of daily living and instrumental activities; the bill also expands covered items to include respite care, counseling/training, employer‑verified lost wages for unpaid time off, caregiver travel, and caregiver‑assisting technologies. Certain other tax benefits and exclusions (e.g., dependent care credits, medical expense deductions, ABLE contributions) either reduce or are excluded from the credit calculation, and taxpayers must report the care recipient’s and certifying practitioner’s identification on the return to claim the credit.