States Are Handing Out Caregiver Tax Credits — But the Math Still Hurts

A growing number of states have introduced tax credits for family caregivers, but experts say the relief rarely covers more than a sliver of what caregiving actually costs.

More than a dozen states now offer some form of caregiver tax credit for families looking after aging or disabled relatives.
Annual out-of-pocket caregiving costs can run into the tens of thousands of dollars, while most credits top out well below that figure.
Family caregivers frequently reduce work hours or exit the workforce entirely, compounding the financial hit beyond direct expenses.
Eligibility rules vary sharply by state, leaving many caregivers unable to claim credits even when a program technically exists.
Advocates are pushing for federal action, arguing that patchwork state programs cannot close a gap this large on their own.

It usually starts before anyone calls it caregiving. A parent's driving gets dicey, a sibling starts missing medications, and suddenly someone in the family is quietly picking up shifts — scheduling appointments, managing prescriptions, sometimes moving in. By the time the word “caregiver” applies, the costs are already stacking up.

A wave of state legislatures has taken notice. According to a MarketWatch report published this week, more than a dozen states have introduced or expanded tax credits aimed at offsetting the financial burden carried by family caregivers — the unpaid relatives managing care for aging parents, disabled spouses, or children with complex medical needs. On paper, that looks like progress. In practice, the numbers are harder to celebrate.

The average family caregiver spends somewhere in the range of $7,000 a year in direct out-of-pocket costs, according to figures cited in the report, with higher-need situations running significantly beyond that. Most state credits cap out at a few hundred dollars — enough to cover a month of prescription copays, not much else. Some programs limit eligibility by income, care recipient age, or the type of expenses that qualify, meaning a caregiver who checks three of four boxes walks away with nothing.

The career toll compounds the financial one. Caregivers who scale back to part-time or leave the workforce altogether lose wages, retirement contributions, and in some cases employer-sponsored health coverage — costs that no tax credit, state or federal, currently touches.

Advocacy groups have been pressing for a federal caregiver credit for years. Congress has considered versions of the proposal in recent sessions without moving one into law. In the meantime, the patchwork holds — and the gap between what states are offering and what caregiving actually costs keeps the pressure on family balance sheets heading into 2025.