Caregiver Tax Credits are a big deal. In March of 2025, the Credit for Caring Act was reintroduced in Congress with support from lawmakers in both political parties.
This bill would provide family caregivers with a tax credit of up to $5,000 per year to offset out-of-pocket expenses for home-care aides, adult day care, respite care, home modifications, and transportation. As of today, the bill remains in committee.
More than 63 million Americans currently provide unpaid care for an aging parent, spouse, child, or other loved one. Family caregivers now provide an estimated $600 billion in unpaid care each year,.
This caregiving support helps millions of older adults remain in their homes and reduces reliance on institutional care. Without unpaid family caregivers, many older adults would likely require earlier placement in assisted living or nursing homes, increasing costs for families as well as public programs like Medicaid.
Nearly eight in 10 family caregivers report paying caregiving expenses out of their own pockets. Average spending by these caregivers exceeds $7,200 annually. They are often balancing jobs and family responsibilities.
Several states have already enacted similar programs, creating a growing mix of state caregiver tax credits while Congress continues debating a nationwide approach. Below is a summary of states that offer caregiver tax credits in 2026.
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Eight States Offering Caregiver Tax Credits
| State | Description of Tax Relief |
|---|---|
| Nebraska | Nonrefundable tax credit for family caregivers starting in 2025, covering 50% of eligible expenses, with a maximum of $2,000 or $3,000 for veterans or dementia patients. |
| Georgia | Offers a tax credit for family caregivers, details may vary. |
| Missouri | Provides tax credits aimed at supporting family caregivers. |
| Montana | Has specific tax credits available for caregivers. |
| New Jersey | Offers caregiver tax credits to alleviate financial strain. |
| North Dakota | Provides tax relief options for family caregivers. |
| Oklahoma | Offers tax credits to support caregivers financially. |
| South Carolina | Provides tax credits aimed at assisting family caregivers. |
Key Points to Consider
- Eligibility: Generally, to qualify for these tax credits, caregivers must provide care to eligible family members and incur related expenses
- Application Process: Most states require an application to be filed with the respective Department of Revenue to claim these credits
- Financial Impact: These credits can significantly reduce the out-of-pocket costs associated with caregiving, which can average over $7,200 annually.
- Caregiver Tax Deductions in Michigan, Indiana, and Illinois
Michigan
- Tax Credits: Michigan does not offer a specific caregiver tax credit.
- Deductions: Caregivers can deduct certain medical expenses related to caregiving.
Indiana
- Tax Credits: Indiana does not have a specific caregiver tax credit.
- Deductions: Caregivers can deduct up to $1,500 for caregiving expenses incurred while caring for a qualifying relative.
Illinois
- Tax Credits: Illinois does not provide a specific caregiver tax credit.
- Deductions: Caregivers can deduct medical expenses related to caregiving on their state tax returns.
Understanding the specific requirements and benefits in each state can help caregivers maximize their tax relief options. One major difference between federal and state proposals involves which expenses qualify.
State caregiver tax credits commonly reimburse costs such as home modifications, wheelchair ramps, durable medical equipment, respite care, adult day care, transportation, and in-home assistance. Some states also allow reimbursement for assistive technology that helps older adults remain independent.
Although the paused Federal Credit for Caring Act covers many similar expenses, each program establishes its own definitions and documentation requirements. Caregivers should carefully review qualifying expenses before assuming every purchase will be eligible for reimbursement.
Aging Population and Caregiving
Among Americans who turned 65 between 2022 and 2025, 56% will develop a need for long-term-care services and supports, with one in five needing care for more than five years, according to the U.S. Department of Health and Human Services. Currently, more than 8.3 million adults over the age of 50 have difficulty with one or more activities of daily living, according to researchers at the New School.
The efforts to advance tax credits come as people in the U.S. are living longer and as the oldest baby boomers turn 80 this year. As many as 77% of people aged 50 and older want to stay in their own home as they age, but only 49% think that they will be able to do so, according to AARP.
Families: Watch Both Federal and State Developments
Because the federal proposal has not yet been enacted, caregivers should avoid assuming a new credit will automatically appear on future tax returns. However, momentum behind caregiver tax relief continues to grow, with bipartisan support in Congress and increasing interest among state legislatures.
Some states may adopt or expand their own caregiver credits even if federal legislation moves more slowly. Families should monitor announcements from the IRS, their state revenue department, and reputable advocacy organizations for updates. Staying informed may allow eligible caregivers to take advantage of new tax benefits as soon as they become available.
Morningstar reported that Connecticut is poised to offer a tax credit for caregivers. Lawmakers in the state recently passed a state budget that includes the new family caregiver tax credit. Gov. Ned Lamont is expected to sign the legislation into law shortly.
Image by Gerd Altmann from Pixabay
Q3 is Here
The year seems to be flying by. As Q3 is upon us, I feel compelled to ask: have you reviewed your overall contingency plans this year? Featuring Lindsay last week is a humbling reminder to ask yourself, “do you have support for you and your loved ones to navigate a care crisis?”
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Learn more about my work @ The Living Planner. For pre-planners who would like information about overall planning, my book can help you prepare. The 2026 edition of Living Planner What to Prepare Now While You Are Living © can be purchased HERE.
Thought for the week: July 4th reminds us that we are 250 years old as a country. Let’s remember the lessons of our forefathers and cherish their vision for our country. Their principles encourage thoughtful decision-making and an informed electorate, essential for a healthy democracy. I hope you all had a nice holiday. Lynn
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