Kentucky introduces caregiver tax credit for eligible family members

On February 7, 2025, the Kentucky State Legislature introduced House Bill 226, a significant piece of legislation aimed at providing financial relief to caregivers of eligible family members. This bill proposes a nonrefundable tax credit for caregivers, addressing the growing need for support as more families navigate the challenges of caregiving, particularly for veterans and individuals with dementia.

The primary provision of House Bill 226 allows eligible caregivers to claim a tax credit equal to 50% of their qualifying expenses, with a cap of $3,000 for caregivers of veterans or individuals diagnosed with dementia, and $2,000 for all other eligible family members. However, the bill stipulates that caregivers with a modified gross income exceeding $100,000 per year will not qualify for this credit. Additionally, if multiple caregivers are involved in caring for the same family member, they cannot claim credits for the same expenses, ensuring that the benefits are distributed fairly.

The bill sets an aggregate cap of $1.5 million on the total credits that can be claimed each year, with provisions for adjusting this cap based on the previous year's claims. This aspect of the bill has sparked discussions among lawmakers about the potential financial implications for the state budget and the sustainability of the program.

Supporters of House Bill 226 argue that it addresses a critical need for financial assistance among caregivers, who often face significant out-of-pocket expenses while providing essential care. They emphasize that this legislation could alleviate some of the financial burdens on families, allowing them to focus more on the well-being of their loved ones.

Opposition to the bill has emerged, primarily centered around concerns regarding the fiscal impact on the state’s budget and the potential for misuse of the credits. Critics argue that the income cap may exclude many middle-class families who also struggle with caregiving costs, suggesting that the bill could be more inclusive.

As the bill moves through the legislative process, its implications for Kentucky families could be profound. If passed, House Bill 226 may not only provide much-needed financial relief but also highlight the importance of supporting caregivers in the community. The ongoing debates will likely shape the final version of the bill, as lawmakers seek to balance fiscal responsibility with the pressing needs of Kentucky's caregivers.