June 23, 2026
As the population ages, a growing number of adults in the United States take care of loved ones with chronic illnesses, disabilities, and dementia. But caregiving is expensive and often difficult to balance with work and other responsibilities.
About 70 percent of caregivers believe a tax credit would help them manage these costs. In fact, the U.S. already has a tax credit called the Child and Dependent Care Credit (CDCC), which can help cover some caregiving expenses, but it’s not widely used by those caring for older adults.
Could changes to the CDCC ease the burden for family caregivers? In a new paper recently published ahead of print in the National Tax Journal, Gabrelle Pepin and Yulya Truskinovsky show that the CDCC’s impact is limited partly because the eligibility rules are restrictive, excluding households where one adult stays home to provide caregiving and those who do not earn enough to owe federal income taxes. The authors demonstrate that an expanded tax credit could reach dramatically more caregivers.
While millions of Americans are living with an individual who requires caregiving and could potentially qualify for the credit, only a small share actually do. Overall, about 8 percent of adults aged 51–65 are caring for a spouse or parent with serious health needs—some 5 million Americans. Yet only about 10–16 percent of those caregivers—fewer than 1 million Americans—qualify for the CDCC under current rules.
The authors suggest reforms to make the credit more effective. Critically, the credit is nonrefundable, meaning that people with low incomes who don’t owe federal income taxes cannot benefit from it at all—leaving out those who need the most help with care costs. As the figure below shows, making the CDCC refundable would nearly double the number of eligible spousal caregivers. Removing the requirement that all adults in the household (aside from the person in need of care) must be working to qualify would also expand access. These changes would especially benefit women, minorities, and lower-income households.
Finally, raising the value of the credit—currently a maximum of $1,050 per qualifying dependent—would also help meaningfully reduce costs for caregivers.
With expected cuts to Medicaid, America’s main source of funding for long-term care facilities, more families may need to rely on care at home. Expanding the CDCC could help reduce financial strain and better support the millions of Americans caring for aging loved ones.
To learn more, read the paper, policy brief, or journal article.
Experts
