Credit for Caring Act of 2025

Overview: Provides a non-refundable federal tax credit for expenses incurred by taxpayers who are eligible caregivers for a spouse or dependent child
or relative who needs long-term care services and supports (LTSS) and has developmental or intellectual disabilities or other chronic condition
or care needs.

Caregiver Population: All eligible taxpayers who are caregivers for a qualified care recipient; incur expenses providing care; and have earned income in the excess of $7,500 in the taxable year.

Care Recipient Eligibility Requirements: An The care recipient must be the spouse or dependent child or relative (as defined by the IRC) of a caregiver. They also must be designated by a licensed health care practitioner as having long-term care needs for at least 180 consecutive days during the taxable year. If the care recipient is 6 years or older, they must be unable to perform at least 2 activities of daily living (ADLs) without significant assistance or supervision due to cognitive disability and be unable to perform at least 1 ADL without assistance or be unable to engage in age-appropriate activities. If the care recipient is at least 2 years old but younger than 6, they must lack the capacity to do at least 2 of the following ADLs: eating, mobility, or transferring. If the care recipient is under 2 years old, they must require durable medical equipment as the result of a severe health condition or require a skilled practitioner to be present if parents or guardians are absent.

Amount of Tax Relief: The credit is 30% of qualified expenses over $2,000 paid by the taxpayer during the taxable year. The maximum allowable tax credit is $5,000. Qualified expenses include goods, services, and supports that assist with the care recipient’s performance of ADLs and are provided only for the care recipient’s use.

Income-based Adjustments/Threshold Amounts: The allowable credit amount is reduced by $100 for each $1,000 above $150,000 of taxpayer’s adjusted gross income (AGI) if filing jointly or $75,000 for any other return status.

Indexing for Inflation: Amounts are adjusted by the medical care cost index.