Credit for Caring Act of 2025
- Sponsor
- Rep. Carey, Mike [R-OH-15]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 11, 2025
Bottom line
The bill provides financial relief to working family caregivers by offering a tax credit for a wide range of care-related expenses, subject to income limitations and a cap.
What it actually does
This bill establishes a new refundable tax credit for working family caregivers, allowing them to claim 30 percent of qualified caregiving expenses exceeding $2,000, up to a maximum credit of $5,000. The credit is available to individuals with earned income over $7,500 who provide care for a spouse or specific relatives with certified long-term care needs. It also includes an income-based phase-out for higher earners.
Proponents argue
Supporters argue that this bill provides much-needed financial relief to working family caregivers who often face significant out-of-pocket expenses and lost wages while balancing employment and caregiving responsibilities. They contend it recognizes the invaluable economic and social contributions of caregivers and helps ensure that individuals with long-term care needs can remain in their homes and communities.
Opponents contend
Critics may argue that while the intent is laudable, the bill could add significantly to the national debt through a new tax expenditure without a clear funding mechanism. Concerns might also be raised about the administrative complexity for both taxpayers and the IRS in verifying a broad range of qualified expenses, potentially leading to inefficiencies or opportunities for fraud.
The bill is relatively short and clearly structured, making it accessible for an informed reader to understand its core provisions within a reasonable timeframe.
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsections (a) and (b).
Working Family Caregivers Tax Credit Establishment
This provision establishes a new tax credit for eligible caregivers, allowing them to claim 30 percent of qualified expenses that exceed $2,000. The maximum credit amount is capped at $5,000 per taxable year, with this cap adjusted for inflation in subsequent years based on medical care cost adjustments.
Supporters argue
Proponents argue that this credit provides direct and meaningful financial assistance to caregivers, helping to offset the substantial costs associated with providing long-term care and recognizing their dedication.
Critics contend
Opponents may contend that while beneficial, a new tax credit adds to the national debt and may not be the most efficient mechanism for delivering support compared to direct service programs.
Tradeoffs
The provision balances the goal of providing financial relief to caregivers with the fiscal implications of creating a new tax expenditure, setting a cap and threshold to manage costs.
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsection (c).
Eligibility Criteria for Caregivers
This section defines an 'eligible caregiver' as an individual who incurs qualified expenses for a qualified care recipient during the taxable year and has earned income exceeding $7,500 for that year. This ensures the credit is targeted towards individuals actively participating in the workforce.
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsection (d).
Definition of Qualified Care Recipient and Long-Term Care Needs
This provision defines a 'qualified care recipient' as the eligible caregiver's spouse or a specific relative who has been certified by a licensed health care practitioner as having long-term care needs for at least 180 consecutive days within the taxable year. It outlines specific criteria for long-term care needs based on age, functional capacity, and cognitive impairment, including inability to perform activities of daily living or requiring substantial supervision.
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsection (e).
Scope of Qualified Expenses
This section broadly defines 'qualified expenses' to include expenditures for goods, services, and supports that assist a qualified care recipient with daily living activities. It explicitly lists categories such as human assistance, assistive technologies, home modifications, health maintenance tasks, transportation, and non-health items. Additionally, it includes specific caregiver-related expenses like respite care, counseling, lost wages for unpaid time off (if employer-verified), and travel costs. It also coordinates with other tax benefits to prevent double-dipping.
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsection (f).
Income-Based Phase-Out of Credit
This section introduces an income-based phase-out for the credit. The credit amount is reduced by $100 for every $1,000 (or fraction thereof) by which a taxpayer's modified adjusted gross income exceeds a threshold amount. This threshold is set at $150,000 for joint filers and $75,000 for all other filers, with these amounts indexed for inflation in future years.
The amount of qualified expenses taken into account for this credit must be reduced by any amounts claimed under other specified tax benefits, including the child and dependent care credit (section 21), medical expense deductions (section 213), dependent care assistance programs (section 129), health savings accounts (section 223(f)), or ABLE accounts (section 529A(c)(1)(B)).
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsection (e)(2).
Why it matters:This is standard legislative practice to prevent taxpayers from 'double-dipping' by claiming multiple federal tax benefits for the same expenses, ensuring fiscal responsibility and fairness across the tax code.
Case for: Supporters argue this prevents redundant claims, ensuring that federal support is not duplicated and that the credit's fiscal impact is accurately managed.
Case against: Critics might suggest that navigating these coordination rules adds complexity for taxpayers, potentially requiring professional tax assistance to ensure compliance and maximize benefits.
Estimated impact: Prevents an unknown amount of potential double claims, ensuring the credit's cost is limited to new expenditures not already covered by existing tax benefits.
The bill includes 'Lost wages for unpaid time off due to caring for a qualified care recipient as verified by an employer' as a qualified expense for eligible caregivers.
Section 2. "SEC. 25F. WORKING FAMILY CAREGIVERS." subsection (e)(4)(C).
Why it matters:While explicitly stated, the inclusion of 'lost wages' as a qualified expense for a tax credit is less common than direct expenditures for goods or services. Its administrative implications might be significant, making it a detail that could be easily missed by a casual reader.
Case for: Proponents argue that including lost wages directly addresses a significant financial burden for working caregivers who must take unpaid leave, recognizing the economic sacrifice involved in providing care.
Case against: Opponents might contend that verifying 'lost wages' could be administratively complex for both employers and the IRS, potentially leading to disputes, fraud, or an undue burden on businesses.
Estimated impact: Potentially significant financial relief for caregivers who take unpaid leave, but also a potentially significant administrative burden for employers and the IRS in terms of verification.