Sponsors (10)
This bill provides targeted tax relief to help working caregivers afford a wide range of in‑home care expenses and partially replace lost wages, but it excludes many low‑income caregivers (nonrefundable), limits total assistance with a $5,000 cap and income phaseouts, and adds verification and reporting burdens that could delay or complicate claiming the credit.
Eligible caregivers (working taxpayers and middle‑class families) receive a tax credit equal to 30% of qualified caregiving expenses above $2,000, up to $5,000 per year — including verified lost wages — reducing federal income tax liability and partially offsetting income loss from unpaid caregiving.
Caregivers (parents, families, people with disabilities) can apply the credit to a broad set of caregiving costs — respite, assistive devices, home modifications, transportation, counseling, and care coordination — making in‑home care more affordable and supporting access to non‑institutional care.
Indexing the $5,000 cap and the income thresholds for inflation preserves the real value of the benefit over time for future beneficiaries.
Low‑income caregivers who owe little or no federal income tax may receive no benefit because the credit is nonrefundable, effectively excluding many low‑income households from assistance.
The $5,000 annual cap may be insufficient for families with intensive or long‑term caregiving needs, leaving them with significant out‑of‑pocket costs despite the credit.
Certification, substantiation, and reporting requirements (health practitioner certifications, TIN reporting, documentation of expenses, and employer verification of lost wages) create administrative burdens and compliance costs for caregivers, providers, and employers and may delay claims.
Based on analysis of 2 sections of legislative text.
Creates a nonrefundable tax credit equal to 30% of qualified caregiving expenses above $2,000, capped at $5,000 per taxpayer, for eligible working family caregivers with earned income over $7,500.
Introduced March 11, 2025 by Shelley Moore Capito · Last progress March 11, 2025
Creates a new nonrefundable tax credit for "working family caregivers." The credit covers 30% of eligible caregiving expenses above $2,000 in a year, limited to $5,000 per taxpayer (indexed for inflation after 2025). To qualify, a taxpayer must have more than $7,500 in earned income and pay qualified expenses for a related individual who is certified by a licensed health care practitioner as having long‑term care needs for at least 180 consecutive days (with the certification meeting timing and content rules). The credit will reduce federal income tax liability but is not refundable.