Caregiver Tax Credit Could Pass in 2025 With Trump, GOP Support

Advocates for the elderly and people with disabilities are hopeful that, after eight years, Congress may finally pass bipartisan legislation to provide a tax credit for family caregivers in 2025.

Support for the policy was included in the 2024 Republican Party Platform, and President-elect Donald Trump has endorsed it, as well.

It was “one of the few caregiver-specific policies that he talked about on the campaign trail,” said Jason Resendez, CEO of the National Alliance for Caregiving. “So while it’s proved difficult to move to date, I think we’re going to see increased momentum going into the next Congress.”

By helping loved ones with daily activities like eating, bathing and getting dressed, family caregivers provide about $600 billion in unpaid labor each year, AARP estimates. Their efforts allow struggling family members to remain at home, which helps avoid costly institutional care often subsidized by taxpayers.

Care-Giving Costs

But nearly four out of five family caregivers incur about $7,200 a year in care-related expenses, the AARP estimates. That can create financial problems that cause them to cut personal spending or borrow from their retirement savings. Caregivers with jobs may have to cut their hours, forgo promotions, or leave the workforce altogether to care for loved ones.

In 2016, a bipartisan group of lawmakers introduced the Credit for Caring Act that aimed to provide a nonrefundable tax credit for family caregivers. But as party warfare increased over the Affordable Care Act, two Trump impeachment hearings, and Covid-19, the legislation stalled for years.

“Family caregivers were not front and center a few years ago,” said Nancy LeaMond, AARP’s chief advocacy and engagement officer. “We think now there is a general recognition that the 48 million family caregivers who suit up every day to provide support for loved ones are the newest, and the biggest, and the most underappreciated provider group in the health-care industry.”

Reintroduced in the House in January by Reps. Linda Sanchez (D-Calif.) and Mike Carey (R-Ohio), the Credit for Caring Act (HR 7165) provides a nonrefundable tax credit of up to $5,000 to cover 30% of qualified long-term care expenses that exceed $2,000 in a taxable year. Eligible caregivers must have income greater than $7,500, and care expenses for a spouse or dependent relative with long-term care needs.

The income requirement will keep some low-income families from qualifying for the tax credit even though they incur out-of-pocket costs and are more likely to go into debt, to stop paying bills and to stop saving in order to provide care, Resendez said.

The Senate version (S. 3702) was reintroduced by Sens. Shelley Moore Capito (R-W.Va.), and Michael Bennet (D-Colo.). Both Sanchez and Bennet introduced the original legislation in 2016.

In July, the Republican Party Platform said the GOP would “support unpaid Family Caregivers through Tax Credits and reduced red tape.” And Trump supported the policy at an October rally in New York City.

Building Momentum

That momentum is expected to build with Republicans controlling the House, the Senate and the White House.

“Every American either is a caregiver, knows a caregiver, or will receive the help of a caregiver in their lifetime,” said a statement from Carey. “Our Credit for Caring Act will provide much-needed relief for these families, a priority echoed by President-elect Trump on the campaign trail. We are optimistic that this bipartisan, bicameral support will move forward in the coming year.”

The AARP is leading the advocacy charge. LeaMond said the group wants the proposal attached to any tax legislation that moves in the new Congress.

“We’re going to do everything we can to push. We’ve already done some advertising. We’ve done outreach. We’ve sent stories of caregivers in local jurisdictions to members of Congress. So that is our focus,” LeaMond said.

They may not have long to wait. Key provisions of the Republicans’ Tax Cuts and Jobs Act of 2017 are set to expire at the end of 2025, so a tax debate in Congress is all but assured, Resendez said.

“That’s one of the few things that is certain next year. There’s going to need to be a tax package that moves forward, given the expiration of the Trump tax cuts.”

Credits Not Enough?

Being recognized in the tax code elevates the critical role that caregivers play, but “tax credits on their own are not enough,” said Amber Christ, managing director for health advocacy at Justice in Aging. “They’re not a substitute for the significant kind of investment we need in Medicare and Medicaid.”

Vice President Kamala Harris proposed adding a nonskilled home care benefit to Medicare, a policy Justice in Aging supported.

The Joint Committee on Taxation scored a previous version of the legislation at $28 billion over five years, LeaMond said. The Congressional Budget Office has not scored the current proposal.

Resendez is concerned that Medicaid cuts may be used to fund the proposal. “We don’t know what the pay-fors are going to be for this tax credit,” he said.

The alliance also wants the tax credit to be refundable rather than non-refundable, Resendez said. Non-refundable tax credits reduce the amount of taxes a person owes, but a refundable tax credit can provide a refund “if the total of the credits is greater than the taxes you owe,” Resendez said. “The difference is really being able to put money in your pocket sooner rather than later.”

But a nonrefundable tax credit “is what the bill has been since its introduction,” said Megan O’Reilly, AARP’s government affairs vice president for health and family. “And I think that is a piece of the policy that has helped build bipartisan support.”