H.R. 2036: Credit for Caring Act of 2025

The Credit for Caring Act of 2025 would create a federal tax credit for people who work and also pay out of pocket to care for a family member with serious long-term care needs. The credit covers 30% of qualifying care costs above the first $2,000 you spend, capped at $5,000 a year. Spend $8,000 caring for a parent and the credit works out to about $1,800; it takes roughly $18,700 in costs in a single year to reach the full $5,000.

The credit is targeted, not universal. You have to be working — more than $7,500 in earned income for the year. The person you care for has to be a spouse or a close relative, and a licensed health care practitioner has to certify that they have long-term care needs — trouble with everyday activities, or severe cognitive impairment — expected to last at least 180 consecutive days, with part of that stretch falling in the tax year. There are separate rules for young children with severe conditions.

What stands out is how broad the eligible costs are. This is not just nursing or medical bills. It reaches hired direct-care workers, assistive technology and remote monitoring, home modifications, transportation, medication management, respite care, caregiver counseling and training, even employer-verified lost wages for unpaid time off and non-medical items like incontinence supplies. To prevent double-counting, costs you already ran through the dependent care credit, the medical deduction, an FSA, an HSA, or an ABLE account don't count again here.

The credit also narrows as income climbs. It starts shrinking once income passes $150,000 for a married couple or $75,000 for everyone else, dropping $100 for every $1,000 above that line — so a maxed-out $5,000 credit disappears entirely around $200,000 for joint filers. And it is nonrefundable: it can erase income tax you owe down to zero, but families with little tax liability — often the ones stretched thinnest — may not capture its full value. Sponsored by a Republican and cosponsored by 81 members across both parties, the bill's likely friction points are cost, paperwork, and that refundability question.