Income tax credit for family caregivers proposed

Nebraskans could claim a state income tax credit for certain expenses they incur when caring for a family member under a bill heard Jan. 25 by the Revenue Committee.

Sen. Eliot Bostar
Sen. Eliot Bostar

Under LB937, introduced by Sen. Eliot Bostar of Lincoln, a family caregiver would be eligible for a nonrefundable income tax credit equal to 50% of expenses incurred that are directly related to the care for and support of an eligible family member. The credit would be available beginning with tax year 2025.

The maximum credit for a single tax year would be $2,000 or $3,000 if the family member is a veteran or has dementia.

Bostar said the proposal recognizes the sacrifice made by the approximately 179,000 family caregivers in Nebraska who provide more than 168 million hours of unpaid care worth roughly $2.8 billion annually. The average caregiver spends more than $7,200 each year to care for a family member, he said.

“To successfully address the challenges of a surging population of older adults — as well as the hurdles associated with living with chronic conditions — we must develop methods to enable caregivers to continue to support their loved ones at home and in the community,” Bostar said.

Certain improvements to the family member’s primary residence, the purchase of durable medical equipment or the hiring of a home care aide would be among the expenditures eligible for the credit.

To qualify as an eligible family member, an individual would require assistance with at least two activities of daily living, live in a private residence and qualify as the caregiver’s dependent, spouse, parent or other relation by blood or marriage.

Only caregivers with a federal adjusted gross income of less than $50,000, or $100,000 if married filing jointly, could claim the credit.

The state Department of Revenue estimates that LB937 would reduce state general fund revenue by approximately $37.1 million in fiscal year 2025-26, $43.3 million in FY2026-27 and $48.3 million in FY2027-28.

Suzan DeCamp testified in support of the bill on behalf of AARP Nebraska. She said caregivers are essential to the stability of Nebraska’s long-term care system because they allow many of the state’s older residents to remain in their homes instead of moving to expensive, taxpayer-funded assisted living and nursing facilities.

“Caregivers have saved and continue to save the state of Nebraska millions of dollars while bearing some financial risk, taking on increasingly complex tasks and having to balance their caregiving and work responsibilities,” DeCamp said.

Sarah Rasby also testified in support of LB937 on behalf of AARP Nebraska. Rasby said she left her job to provide full-time care for her twin sister, who suffered a severe brain injury. The proposed credit would have helped her cover those expenses, she said.

“My family suffered significantly because we lost all of our income,” Rasby said. “We’re still trying to recover from all of that.”

No one testified in opposition to the bill and the committee took no immediate action on it.

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