Caregiver Tax Credit

The California legislature is considering tax relief for caregivers in next year’s budget; which will come in the form of a tax credit of $5,000 annually – to help offset costs of caring for aging relatives. This is clearly a bi-partisan issue as both Democrats and Republicans have introduced similar legislation.

Calif. State Senator Hanna Beth – Jackson (D- Santa Barbara) has proposed Calif. SB-228 titled “Master Plan on Aging” which has the strong support of Governor Newsome. Calif. Assemblyman Patterson (R-Fresno), has authored a bill that would also give family caregivers tax credits for caregivers. Patterson’s bill AB-251; would provide a state income tax credit of as much as $5,000 to family caregivers for five years, starting in tax year 2020.

Caregivers can be reimbursed for up to 50% of eligible expenses, i.e. retrofitting a home, hiring an aide & leasing or buying specialty equipment. The credit would be available to individuals who make no more than $170,000 a year, or joint income tax filers who make up to $250,000.

Patterson, a Republican, is hopeful he can convince his colleagues that giving people a tax credit is financially sound because it would enable caregivers to keep their loved ones at home, rather than relying on more expensive government services. A 2016 study by AARP found that the average caregiver spends $6,954 a year on out-of-pocket costs caring for a family member. AARP,  is pushing similar bills in at least 7 states this year, said Elaine Ryan, the group’s vice president of state advocacy and strategy integration.

On the federal level, bills that would have created a federal tax credit for as much as $3,000 never got out of congressional committees in 2017. With a new Congress, watch for several committees to propose tax relief for caregivers before the 2020 election.

A tax credit, caregivers claim, would be welcome relief to the estimated 4.5 million family caregivers in California who care for a loved one with a chronic, disabling or serious health condition. Nationwide, the AARP estimates there are about 40 million people caring for family members.

Long-term caregiving has emerged as one of the major issues in California’s Capitol in 2018, with proposals ranging from naming a state“aging czar” to funding a new cash benefit for long-term care services. In his State of the State address last month, Gov. Gavin Newsom called for a master plan for aging. Newsom, has tapped former California first lady Maria Shriver to lead a new Alzheimer’s Prevention & Preparedness Task Force, and asked lawmakers to approve $3 million in state funds for Alzheimer’s disease research.

The credit would be available to individuals who make no more than $170,000 a year, or joint income tax filers who make up to $250,000.


*This post draws heavily from an article by Samantha Young, correspondent for Kaiser Health News, an editorially independent publication of the Kaiser Family Foundation.

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