State Income Tax Credit Could Offset Caregiving Costs

Caring for a loved one often takes more than just love.

Anybody who has ever looked after a parent or other family member knows that time and money are also vitally necessary—and that both are often in short supply.

In fact, a recent poll of family caregivers for AARP New Jersey found that two-thirds worked a job at the same time. Nearly 80 percent spent money on transportation, and more than a third did so on medical equipment, prescription drugs, housing and modifying a living space.

A separate nationwide AARP study from 2021 found that caregivers spent an average of $7,242 a year on out-of-pocket expenses.

“For people who work and take time off, something has to give,” says Crystal McDonald, who is the associate advocacy director for AARP New Jersey.

That reality is fueling an effort to push a bill through the state Legislature that would give a tax credit to help with the costs of caregiving.

The Caregiver’s Assistance Act would provide a state income tax credit to people with up to $100,000 a year in gross income if married and filing jointly, or $50,000 if single or if married but filing separately. They could get credit for 22.5 percent of up to $3,000 in qualified expenses — a total of $675 per year.

Expenses include things such as health aides, medical equipment and home-modification services. The credit is for caregivers living with loved ones and those who support someone living elsewhere.

Caregivers would be eligible for the credit for money spent on a loved one 60 or older (or 50 or older and qualifying for Social Security Disability Insurance) living in the state and meeting income requirements.

Poll shows caregiving stress

The bill already passed through a committee in the General Assembly. The measure, which AARP New Jersey supports, was reintroduced in the current session of the Legislature, which lasts until January 2024.

Deputy General Assembly Speaker Pamela Lampitt (D-Cherry Hill), its primary sponsor, urges caregivers to contact state legislators to advocate for the bill. “I think we would be hard-pressed to find anybody who wouldn’t support something like that,” she says.

A fiscal analysis by the state’s Office of Legislative Services estimates that “roughly 185,000 to 285,000” taxpayers would qualify for the maximum tax credit, and that it would reduce state revenue by $125 million to $200 million a year.

The AARP New Jersey poll, released in June, surveyed 1,200 registered voters 50 and older. It found that 84 percent support expansion of the existing state income tax credit for certain veteran caregivers to all family caregivers. It also documented the demands that caregivers face:

• 39 percent of respondents had experience as a family caregiver, in the past or during the survey;
• 76 percent of current and former caregivers say their responsibilities were stressful;
• 52 percent of those who looked for help said it was hard to find;
• 84 percent of respondents said that if they or a family member needed care, they would prefer it be done at home, not in a nursing or assisted living facility.

For more information on the legislation, poll and other caregiving topics, go to aarp.org/new-jersey/caregiving.

Cristina Rouvalis is a writer living in Pittsburgh.

For More on Caregiving

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• How to Find a Caregiver Support Group That's Right for You
• How to Get Teens Involved in Family Caregiving