Multigenerational HOMES Act
- Sponsor
- Rep. Strickland, Marilyn [D-WA-10]
- Committees
- Ways and Means Committee (primary)
- Last action
- Oct 1, 2026
Bottom line
The Multigenerational HOMES Act creates a new federal tax credit to help homeowners offset the costs of modifying their homes to accommodate elderly or disabled relatives, or to house caregivers, with specific income limitations and a refundable component for lower-income households.
What it actually does
This bill establishes a new nonrefundable personal income tax credit, capped at $7,500 per dwelling unit, for 15% of expenditures made to renovate a home for multigenerational living. It includes provisions for income-based phaseouts for higher earners and makes the credit refundable for lower-income taxpayers whose adjusted gross income does not exceed the area median gross income. The credit covers expenses related to improving safety, mobility, or accessibility for a qualified elderly or disabled relative, or for creating living quarters for a caregiver relative.
Proponents argue
Proponents argue that this bill addresses the growing need for affordable care options for an aging population and individuals with disabilities by supporting families who choose to provide care at home. They contend that the credit will ease the financial burden of necessary home modifications, promote family unity, and potentially reduce demand on institutional care facilities, thereby offering a cost-effective solution for long-term care.
Opponents contend
Opponents might argue that while well-intentioned, the tax credit could be an inefficient use of taxpayer dollars, potentially benefiting those who would undertake such renovations regardless of the credit. They may also raise concerns about the administrative complexity for both taxpayers and the IRS in verifying eligible expenditures and qualified relatives, and whether the credit's cap and phaseout adequately target the most financially strained families.
The bill is concise and relatively easy to read, allowing an informed reader to understand its core provisions within the time typically allotted for legislative review.
Section 25G(a)
Establishment of Multigenerational Home Renovation Tax Credit
This provision creates a new tax credit for individuals who make qualified renovations to their homes to support multigenerational living. Taxpayers can claim a credit equal to 15% of their eligible expenditures. This credit is nonrefundable, meaning it can reduce a taxpayer's liability to zero but generally won't result in a refund, unless other provisions apply.
Supporters argue
Supporters argue that this credit directly incentivizes and makes more affordable the necessary home modifications for families caring for elderly or disabled loved ones, promoting in-home care over institutionalization.
Critics contend
Critics might suggest that a 15% credit may not be a strong enough incentive for major renovations, or that it might primarily benefit those already planning such projects, rather than stimulating new activity.
Tradeoffs
The provision balances the desire to support family caregiving with the fiscal cost of a new tax expenditure, aiming to provide a meaningful incentive without being overly generous.
Section 25G(a)(2) and Section 25G(e)
Lifetime Credit Limitation and Inflation Adjustments
The bill sets a lifetime cap of $7,500 for the credit allowed with respect to any single qualified dwelling unit. This means a taxpayer (or their spouse) cannot claim more than $7,500 in total credits for renovations on the same home over time. Starting in 2028, this $7,500 cap, along with the income phaseout thresholds, will be adjusted annually for inflation.
Section 25G(b)
Income-Based Phaseout
The credit amount is reduced for taxpayers whose modified adjusted gross income (MAGI) exceeds certain thresholds. For single filers, the phaseout begins at $200,000 MAGI, and for joint filers, it begins at $400,000 MAGI. The credit is reduced proportionally over an income range of $75,000, meaning it phases out completely for single filers with MAGI above $275,000 and joint filers with MAGI above $475,000.
Section 25G(d)
Definitions of Qualified Expenditures and Relatives
This section defines what types of expenditures qualify for the credit and who counts as a 'qualified relative.' Qualified expenditures include tangible personal property and associated labor/inspections for improving safety, mobility, or accessibility for a qualified relative, or providing living quarters for a caregiver relative. A 'qualified relative' must be age 65 or older or disabled, live in the dwelling unit for more than half the year, and have a specific familial relationship to the taxpayer or spouse (e.g., parent, child, sibling, certain in-laws).
The credit is made refundable for lower-income taxpayers whose adjusted gross income does not exceed the area median gross income.
Section 25G(c)
Why it matters:This is standard legislative practice for defining specific eligibility criteria by referencing existing tax code sections, but it requires careful reading to understand the full scope of the credit's benefit.
Case for: Supporters highlight that making the credit refundable for lower-income families significantly expands its impact, ensuring that those with little or no tax liability can still receive the full benefit, which is critical for equity.
Case against: Critics might argue that refundable credits add directly to the federal deficit, and the mechanism for determining 'area median gross income' can be complex and potentially lead to disparities or administrative burdens.
Estimated impact: This provision significantly alters the financial impact for a segment of eligible taxpayers, turning a nonrefundable credit into a direct financial payment for those below the area median gross income.
The definition of 'qualified relative' specifically references subparagraphs (B), (C), (D), (F), or (G) of section 152(d)(2) of the Internal Revenue Code, but then modifies subparagraph (G) to include only father-in-law, mother-in-law, brother-in-law, or sister-in-law.
Section 25G(d)(3)(B)
Why it matters:This is common legislative shorthand to avoid reprinting lengthy definitions from existing law, but the specific modification to subparagraph (G) is a critical detail that could be overlooked.
Case for: Proponents argue that referencing existing tax code definitions provides clarity and consistency, while the specific modification ensures the credit targets the most common and direct familial caregiving relationships.
Case against: Critics might contend that the specific exclusion of other relationships under 152(d)(2)(G) (e.g., other individuals who live with the taxpayer as part of the household) could be arbitrary and exclude legitimate caregiving arrangements.
Estimated impact: This precise definition determines the universe of individuals whose caregiving arrangements can qualify a taxpayer for the credit, directly impacting the number of eligible households.
A 'safe harbor' provision states that an expenditure will not fail to qualify solely because the dwelling unit is not immediately occupied, provided the person occupies it within one year after the completion of improvements.
Section 25G(d)(5)
Why it matters:This is a practical, administrative detail designed to provide flexibility for taxpayers, rather than a core policy driver, so its placement in definitions is typical.
Case for: Supporters highlight this as a common-sense provision that acknowledges the practical realities of renovation projects, which often precede immediate occupancy, preventing undue disqualification.
Case against: No specific opposition is typically raised against this type of administrative flexibility, as it generally improves the workability of the credit without significantly altering its intent.
Estimated impact: This provision prevents a small number of otherwise eligible taxpayers from being disqualified due to timing issues, ensuring the credit is accessible to more families.