RICHMOND – A little over 1 million Virginia caregivers on average provide 956 million hours of care to family members, friends and loved ones with chronic illness or a disabling condition.
And most of them are spending their own money on caregiving expenses. According to a new study by the American Association of Retired Persons (AARP), three-quarters of the family caregivers surveyed reported spending an average of $7,242 annually on out-of-pocket costs related to caregiving.
A House panel on Monday unanimously backed legislation that would bring some tax relief to many of these family caregivers. The measure, sponsored by Del. Sam Rasoul, D-Roanoke, would create a nonrefundable income tax deduction for taxable years 2022 through 2026 for expenses incurred by someone caring for an eligible family member who requires assistance with one or more activities of daily living.
The deduction equals 50 percent of eligible expenditures incurred by the caregiver up to $1,000. To qualify, the family caregiver must not receive any compensation or reimbursement for the eligible expenditures and have federal adjusted gross income that is no greater than $100,000 for an individual or $200,000 for married couples.
“This is a policy that impacts so many of us, in fact, this is probably Virginia’s largest workforce that goes unaccounted for,” Rasoul told a House Finance subcommittee Monday. “Currently we have almost 1 billion hours of family caregiver time that is given to family members who need the service valued at over $12 billion worth of services, and we as a society haven’t been doing too much to be able to show that value as we move forward,” Rasoul said.
Contributing to a loved one’s housing expenses — paying for rent, mortgage, assisted living, home modifications and more — accounted for more than half of all costs incurred by caregivers, according to the AARP survey. Medical expenses add up quickly, too – one-fifth of caregiver spending, more than $1,200 per year, went to direct payments for health care providers, hospitals, therapists, medical equipment and devices, in-home care, and adult daycare.
Rasoul underscored that his tax relief bill would not include a caregiver’s time but help with expenses like the purchase of equipment, home modifications, or respite care for home care aid. “I can tell you myself as the child of two aging parents we see the expenditures on a regular basis and they are continuing to mount up,” Rasoul said.
Should it become law, the legislation would help families like that of Mike Olex from Ashland, who is living with multiple sclerosis and relies on his wife as a principal caregiver. Olex’s dependence on a wheelchair required “major additions” to the back of his family’s home that cost “thousands and thousands of dollars,” he said before the committee. “We’re just trying to raise our two kids here in Ashland and take care of everything. This is unyielding in terms of adding additional amounts of cost, so this would be a tremendously helpful bill if this were to go through,” Olex said.
Henrico County resident Marques Jones, owner of a personal care company and himself living with MS, said there is “so much good that can come” from Rasoul’s proposal. “In my line of work I see people actually who either go part time or step out of the workforce or change professions to be able to care for their loved ones, and this credit would help, in a small way, to give them a little bit of boost,” Jones said, adding that his company provides respite service to Olex when his wife is out of town. “Something like this would help offset those costs,” he said.
The committee unanimously approved Rasoul’s measure including an amendment that changed his initially proposed tax credit to a tax deduction. The latter can only lower taxable income and the tax rate that is used to calculate a tax, which can result in a larger refund of a withholding. A credit reduces a tax, giving a larger refund of a withholding, but certain tax credits result in a refund even without a withholding.
“I think that this is a healthy way to potentially move this policy forward and at least do our little part to show caregivers that we are doing everything to support them, especially during this difficult time of COVID-19 and trying to keep these dollars in their pockets,” Rasoul said.