Caring for a loved one with Alzheimer’s or another form of dementia is both a labor of love and a significant financial burden. Millions of Americans provide unpaid care, facing emotional, physical, and financial challenges along the way. To address these difficulties, the Credit for Caring Act (CCA) has been introduced in Congress, offering financial relief to family caregivers through a new tax credit.

The Credit for Caring Act is a bipartisan, bicameral bill that would establish a tax credit for eligible individuals who spend personal dollars on services for family members requiring long-term care. The bill, which was introduced by Congressman Mike Carey (R-OH-15) and Linda Sánchez (D-CA-38) in the U.S. House and by Senators Michael Bennet (D-CO) and Shelley Moore Capito (R-WV) in the U.S. Senate, would provide up to a $5,000 federal tax credit for eligible and working family caregivers.

Why the Credit for Caring Act is Needed

Family caregivers play a crucial role in helping individuals with dementia live safely at home. However, the financial toll is staggering. In 2023, over 11 million caregivers provided 18.4 billion hours of unpaid care, valued at nearly $350 billion. The total lifetime cost of care for a person with dementia was estimated at $400,000 in 2023. Families bear 70% of the total cost, covering medical expenses, home care, and respite services. On average, caregivers spent $12,388 per year in out-of-pocket expenses. Nearly 40% of caregivers struggled with food insecurity due to caregiving costs. With financial strain forcing many families to cut back on essential spending and savings, the Credit for Caring Act seeks to provide much-needed relief.

How the Credit for Caring Act Works

The Credit for Caring Act would establish a non-refundable federal tax credit of up to $5,000 for eligible family caregivers of individuals with functional or cognitive impairments, regardless of age. This financial support can help caregivers cover necessary expenses and reduce economic stress.

Who Qualifies for the Tax Credit?

To be eligible as a caregiver, you must earn at least $7,500 annually and provide care for someone with certified long-term care needs. The tax credit phases out for individuals earning over $75,000 and for couples filing jointly earning over $150,000. To be eligible as a care recipient, the person you care for must be a family member, have long-term care needs certified by a licensed health care provider for at least 180 days, and require substantial assistance with at least two activities of daily living (e.g., eating, bathing, dressing) or need supervision due to severe cognitive impairment.

What Expenses Are Covered?

Eligible caregiving expenses include home care aide services, adult day care services, home modifications (e.g., wheelchair ramps), assistive technologies, respite care, transportation costs, caregiver counseling and training, and lost wages due to unpaid caregiving leave.

How This Credit Differs from Other Caregiver Tax Benefits

Unlike the Child and Dependent Care Tax Credit, the Credit for Caring Act would help caregivers who support family members who are not dependents or who do not live with them. Additionally, the bill prevents “double-dipping” by ensuring that caregivers cannot claim multiple tax benefits for the same expenses (e.g., Dependent Care Flexible Spending Accounts or employer-provided caregiving benefits).

Conclusion

Our firm is monitoring the progress of The Credit for Caring Act during this legislative session. Family caregivers provide essential, unpaid care that helps millions of Americans with dementia maintain their quality of life. The Credit for Caring Act offers a step toward recognizing and alleviating the financial burden they face. By supporting this bipartisan effort, we can help caregivers continue their invaluable work without compromising their financial stability.

Should you be inclined, you can take action by contacting your representatives to encourage them to cosponsor the Credit for Caring Act.