Credit for Caring Act of 2025

Bill Number: S. 925
Origin Chamber: Senate
Congress: 119th Congress, Session 1
Policy Area: Taxation
Status: Introduced
Latest Action: 2025-03-11: Read twice and referred to the Committee on Finance.
Last Updated: 2026-06-16T15:01:22Z

AI-Generated Summary

Purpose

The Credit for Caring Act of 2025 aims to provide financial relief to working family members who care for relatives with long-term care needs by offering a tax credit for related expenses. This encourages caregivers to remain in the workforce while supporting their loved ones.

Key Provisions

Tax Credit Amount: Eligible caregivers can claim a credit equal to 30% of qualified expenses that exceed $2,000, up to a maximum of $5,000 per year. The maximum is adjusted annually for inflation starting in 2026, based on medical care cost increases, and rounded to the nearest $50.
Eligibility for Caregivers: An individual qualifies if they have earned income over $7,500 in the tax year and pay or incur qualified expenses for care. Earned income refers to wages or self-employment earnings used in other tax calculations, like the earned income tax credit.
Qualified Care Recipients: These include a spouse or close relatives (such as children, parents, or siblings) who are certified by a licensed health care provider as having long-term care needs for at least 180 consecutive days, part of which falls in the tax year. Certification must occur within 39.5 months before the tax return due date.
Long-Term Care Needs Criteria (varies by age):
Ages 6+: Unable to perform at least 2 activities of daily living (e.g., bathing, dressing) without substantial help, or needs supervision due to cognitive impairment affecting at least 1 activity.
Ages 2-5: Unable to perform at least 2 basic activities (eating, transferring, mobility) without help.
Under 2: Requires specialized medical equipment or skilled care when parents/guardians are absent due to a severe health condition.
Qualified Expenses: Cover goods, services, and supports helping with daily activities (e.g., eating, bathing) or instrumental tasks (e.g., managing medications, transportation). Examples include:
Human assistance (e.g., hiring a direct care worker).
Assistive devices (e.g., remote health monitors), home modifications, respite care (temporary relief for caregivers), counseling/training, lost wages from unpaid time off (verified by employer), travel costs, and certain technologies.
Excludes contributions to ABLE accounts (savings for people with disabilities). Expenses must be documented, and amounts are reduced if already claimed under other tax benefits (e.g., child care credit or medical deductions).
Travel uses a standard mileage rate for medical purposes instead of actual costs.
Income Phase-Out: The credit reduces by $100 for every $1,000 (or fraction) that modified adjusted gross income (AGI plus certain foreign income exclusions) exceeds $75,000 (single filer) or $150,000 (joint return). Thresholds adjust for inflation after 2025.
Reporting Requirements: Taxpayers must include the care recipient's name and ID number, plus the certifying health provider's ID, on their tax return. No credit without proper substantiation.

Significant Changes to Existing Law

This bill adds a new section (25F) to the Internal Revenue Code (IRC), creating the first dedicated tax credit for working family caregivers' expenses. It builds on existing IRC definitions (e.g., activities of daily living from long-term care insurance rules) but introduces novel elements like credits for lost wages and caregiver training. It applies to tax years starting after December 31, 2024, without altering prior credits like the child and dependent care credit (section 21) or medical expense deduction (section 213), though it coordinates by reducing overlaps.

Potential Impacts

On Citizens: Reduces financial burden for middle-income families caring for elderly, disabled, or ill relatives, potentially allowing more caregivers to stay employed. Could lower out-of-pocket costs for home-based care, promoting family-centered support over institutional options.
On Government Agencies: The IRS will handle increased claims, certifications, and audits, adding administrative workload. Expected to decrease federal tax revenue (exact amount unspecified), possibly straining budgets without offsets.
On International Relations: Minimal direct impact, though it may indirectly support U.S. families with expatriate caregivers by including certain foreign income in phase-out calculations.

Main Stakeholders Affected

Working Family Caregivers: Primary beneficiaries, especially those with moderate incomes earning over $7,500 but under phase-out thresholds.
Qualified Care Recipients: Families with spouses, children, or relatives needing long-term care, including the elderly, disabled individuals, and young children with severe conditions.
Health Care Providers: Licensed practitioners (e.g., doctors) who certify needs, potentially seeing more certification requests.
Employers: Involved in verifying lost wages for unpaid leave.
Taxpayers and IRS: Broader taxpayers may face indirect costs via reduced revenue; IRS manages enforcement.

Notable Legal, Constitutional, or Political Implications

Legal: Introduces verification challenges for the IRS, such as validating certifications and expenses, which could lead to regulations or guidance from the Treasury Secretary (in consultation with Health and Human Services). Aligns with existing IRC frameworks but expands "qualified expenses" beyond traditional medical deductions, risking disputes over what's allowable (e.g., non-health items like incontinence supplies).
Constitutional: No apparent issues; it's a standard congressional power to lay and collect taxes (Article I, Section 8). Equal protection concerns are unlikely, as eligibility is based on objective criteria like income and relationships.
Political: Supports bipartisan goals of family support and workforce participation (introduced by Sens. Capito and Bennet). Could influence debates on aging populations, disability rights, and tax equity, potentially setting precedent for future caregiver incentives amid rising long-term care costs. Referred to the Senate Finance Committee, its passage would require House approval and presidential signature.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Capito, Shelley Moore [R-WV]

Cosponsors (11)

Sen. Bennet, Michael F. [D-CO], Sen. Collins, Susan M. [R-ME], Sen. Baldwin, Tammy [D-WI], Sen. King, Angus S., Jr. [I-ME], Sen. Justice, James C. [R-WV], Sen. Rounds, Mike [R-SD], Sen. Van Hollen, Chris [D-MD], Sen. Murkowski, Lisa [R-AK], Sen. Klobuchar, Amy [D-MN], Sen. Sullivan, Dan [R-AK], Sen. Warnock, Raphael G. [D-GA]