State Tax Break Could Bring Some Relief to Wisconsin Family Caregivers
As his wife’s Alzheimer’s disease progressed, Dan Johnson, 75, found himself constantly adapting the couple’s daily life.
He installed grab bars in their Brookfield condo and gradually added to her wardrobe items that had easier-to-manage closures, such as zippers instead of buttons.
But eventually, his wife couldn’t be left unattended and needed adult day care services. That support gave Johnson a break and gave his wife a chance to socialize, but he had to re-prioritize his monthly budget to be able to foot the bill. The initial cost was $400 to $500 a month, but it grew to $1,200 monthly as her needs increased.
“That’s the big ticket item,” he says. Others in the Alzheimer’s support group he attends face similar struggles.
When lawmakers return to Madison in January, AARP Wisconsin will push for a state tax credit for family caregivers like Johnson that would help offset some of the out-of-pocket expenses they incur while providing care to loved ones.
There are many newer members of the Legislature who may be caregivers themselves but aren’t familiar with the tax credit idea, says Martha Cranley, AARP Wisconsin’s state director.
“We’ll be spending a lot of hours in the Capitol talking to legislators and ... building relationships around this issue,” Cranley says.
AARP Wisconsin has been pushing for a family caregiver tax credit in recent years and had initially promoted a $1,000 credit—but even a smaller amount could be meaningful to families shouldering expenses, she says.
“A $500 tax credit, or something in that realm, is a drop in the bucket, but it’s an acknowledgment that there’s cost,” Cranley says.
She adds that family caregivers also ultimately save the state money by helping individuals stay at home and out of more costly institutions.
Expenses can add up
In 2021, Wisconsin’s 580,000 family caregivers provided an estimated 540 million hours of unpaid care, according to an AARP report that valued the care at an estimated $9.2 billion.
A 2022 AARP survey of Wisconsin residents 45 and older found that 86 percent support providing family caregivers in the state with a tax credit to help with expenses.
Other states have instituted tax credits or reimbursement programs for family caregivers.
This year, Oklahoma lawmakers passed a law that provides eligible family caregivers with a tax credit of up to $2,000 a year, or up to $3,000 per year if the person receiving care is a veteran or has dementia. Eligible expenditures include home modifications to allow an individual to continue to live independently, medical equipment, respite care and home care aides.
The tax credit is one of the largest and most comprehensive of its kind in the nation. Tax breaks for family caregivers in other states are more limited in scope. Some target more specific groups, such as veterans, while others have lower income limits to qualify.
AARP is continuing to push for caregiver tax credits in other states.
In Wisconsin, Cranley hopes that lawmakers will step forward to introduce a family caregiver tax credit bill during the coming legislative year, which kicks off in January.
“We know that there’s interest, but we need champions to get it to the next level,” she says.
Even before the Legislature considers the issue, families can get in the habit of documenting all expenses so they are ready if a state tax credit is adopted, says Jim Brandenburg, a tax partner with the accounting firm Sikich LLP, in Milwaukee.
“You might be surprised at the end of the year what it comes to,” Brandenburg says.
Someone might think they spent $1,000, but it actually amounts to $3,000, he says.
AARP Wisconsin encourages residents to contact their legislators to voice support for a state family caregiver tax credit. The organization also offers information about available resources and how individuals can share their own stories about being a caregiver at aarp.org/wicaregiving.
Individuals caring for aging parents can also find guidance at an IRS page that addresses common questions about deducting caregiving expenses. Go to irs.gov/faqs/irs-procedures/for-caregivers.
Joanne Cleaver is a writer living in Charlotte, North Carolina.
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