How Caregivers Can Save With Tax Credits & Deductions

Caring for an aging parent or grandparent is a labor of love — meaningful, complicated and essential work that’s usually unpaid. Caregiving can also cost you a considerable amount of money: more than $7,200 out of pocket each year.

Fortunately, there are ways to lighten the financial load of caregiving. Keep reading to learn more about tax credits and deductions for caregivers and older adults — and how to claim them.

Tax Credits vs. Tax Deductions

First, a quick primer on tax credits and deductions. Tax credits directly reduce your tax bill, while deductions lower your taxable income.

• Tax credit example: If you owe $2,000 in taxes and you qualify for a $500 tax credit, your tax bill will be lowered to $1,500.

• Tax deduction example: If you earn $70,000 per year and you qualify for a $5,000 tax deduction, you will only be taxed on $65,000.

How to qualify for caregiver tax benefits

Typically, to claim family caregiver tax breaks, you must be able to claim the person as a dependent. That means they’re a relative (like parents, in-laws, or grandparents) with a gross income of less than $5,050.

And while your loved one doesn’t necessarily have to live with you, they must receive more than half their financial support from you. That includes living expenses like food, housing, medical and dental care, clothing, transportation and other necessities. Be sure to keep detailed records of all caregiving expenses!

[H2] Tax Credits for Caregivers

Several states offer tax credits for family caregivers, including Georgia, Missouri, Montana, Nebraska, New Jersey, North Dakota, Oklahoma and South Carolina. If you live in one of these states, be sure to find out if you qualify for the credit.

Beyond state-specific tax breaks, there are two main tax credits for caregivers: the Credit for Other Dependents and the Child Dependent and Care Credit. You may qualify for one or both of these credits.

[H3] Credit for Other Dependents

The Credit for Other Dependents is a $500 tax credit that’s ideal for caregivers who are supporting parents or other older family members.

To qualify, your loved one must be a U.S. citizen, U.S. national or legal resident. They must have a Social Security number or independent taxpayer identification number (TIN). They can be married, but they generally can’t file a joint return with a spouse. You must be able to claim them as a dependent, and you must be the only one to do so.

Expert tip: Use this interactive tool to help determine if you can claim the Credit for Other Dependents.

[H3] Child Dependent and Care Credit

The Child and Dependent Care Credit helps offset costs when you pay someone (e.g., home health worker, adult day care program) to care for your loved one while you work or look for work. You can claim up to 35% of up to $3,000 in caregiving costs for one qualifying person, or up to $6,000 for two or more people. That makes the maximum credit $1,050 for one dependent, or $2,100 for two or more dependents.

To qualify, your loved one must have lived with you in the U.S. for at least six months and be physically or mentally unable to care for themselves. They can have a higher income than $5,050, but they must receive more than half their financial support from you. If you’re married, your spouse must work, be a student or be disabled for you to claim this credit.

Expert tip: Learn more about how to figure and claim the Child and Dependent Care Credit here.

[H2] Tax Deductions for Caregivers

There are two main types of deductions available for family caregivers: the head of household deduction and deductible medical expenses. You can only take one of these deductions.

[H3] Head of household deduction

The head of household deduction raises the standard deduction for single taxpayers or those who are married but filing separately to $23,625 for the 2025 tax year and $24,150 for 2026. That’s an increase of $7,875 and $8,050, respectively. Remember, the higher the deduction, the lower your overall tax bill may be.

You may be eligible for this deduction if you’re single, your loved one is your dependent, and you pay more than half their household expenses. Note that a parent doesn’t have to live with you for you to claim head of household status.

Expert tip: Get more info about caregivers of aging parents filing as head of household here.

[H3] Deductible medical expenses

If you itemize expenses on your tax return instead of taking the standard deduction, you can deduct unreimbursed medical and dental expenses for dependents that exceed 7.5% of your adjusted gross income (AGI).

Example:

• Your AGI is $70,000; 7.5% of $70,000 = $5,250.

• You have $9,250 in qualified medical expenses.

• You can deduct $4,000 ($9,250 - $5,250).

Qualifying medical expenses include things like home healthcare, adult day care, home safety modifications, doctor visits, hospital stays, prescription medications, and transportation to medical appointments.

Expert tip: Find out exactly what is and isn’t deductible here.

[H2] Help Is Available

Taxes can be tricky, so consider hiring a tax professional to cut through the confusion and help you take advantage of all caregiver credits and deductions available.

At ArchWell Health, we care about all your family’s health needs: physical, mental, emotional and financial. If your family is facing financial difficulties, our social workers are here to help you address them. Reach out to your local ArchWell Health center for assistance, and check out our Caregiver Hub to discover more ways we can support you and your loved ones.

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• Tax Benefits for Caregivers of Seniors

• Tax Breaks for Family Caregivers

• How Caregivers Can Save With Tax Credits & Deductions