Family caregivers spent an average of $11,508 out of pocket each year, according to AARP research released in October. In 2021, that figure was $7,242.
That amount equals roughly 31% of household income on average. For caregivers in households earning under $40,000, the share reached 76%.
Most of the spending went to ordinary bills. Household expenses such as food, rent and mortgage payments accounted for 42% of the total, while medical costs made up another 29%.
The tax code will not reimburse those costs directly, but several provisions can reduce what caregiving ultimately costs.
The numbers below apply to 2026 tax returns, which are due April 15, 2027.
1. Claim the person you support as a dependent
You may be able to list a parent as your dependent even if they live in a different city or state. In general, you must provide more than half of their support, and their gross income for 2026 must be below $5,300.
Untaxed Social Security benefits usually do not count toward that income cap, so a parent who relies mostly on Social Security may still qualify.
The support test is more demanding. Money your parent spends on their own living expenses, including funds from those Social Security checks, counts as support they provided for themselves. Be sure to total both sides before assuming you cover more than half.
Each qualifying relative can also generate a $500 credit for other dependents, and the IRS applies additional tests beyond income and support.
2. File as head of household
An unmarried caregiver whose parent qualifies as a dependent may be able to use head of household filing status, even if the parent lives apart from them.
The main requirement is paying more than half the cost of maintaining the parent’s primary home for the year. IRS rules allow that home to be a rest home or a home for the elderly.
The standard deduction shows the difference clearly. For 2026, it is $24,150 for head of household, compared with $16,100 for a single filer.
Head of household tax brackets are also broader, which means more income is taxed at lower rates.
3. Deduct the medical bills you pay
Medical expenses you pay for a dependent can count toward your own medical deduction. So can expenses for someone who would be your dependent except that their gross income is too high, according to IRS Publication 502.
In other words, the $5,300 income limit does not block this break.
Qualified costs can include copays, prescriptions, approved long-term care services, nursing home care when the primary purpose is medical treatment, and home modifications such as ramps and bathroom rails.
Only the amount above 7.5% of your adjusted gross income is deductible, and you must itemize, so this tax break is most useful in years with high bills. In the AARP study, caregivers spent an average of $3,313 a year on medical costs.
Prescription expenses are often a good place to trim before tax season, and there are ways to find lower prices for a parent’s medications.
4. Use the larger dependent care credit
Despite its name, the child and dependent care credit can apply to adults. If a parent or spouse who cannot care for themselves lives with you for more than half the year, adult day care and in-home help that allow you to work or search for work may qualify.
For 2026, the top credit rate increased to 50% from 35%, according to draft instructions for Form 2441 covering child and dependent care expenses. That highest rate is reserved for lower incomes.
Married couples with adjusted gross income between $43,000 and $150,000 remain at 35%, which can be worth as much as $1,050 on the $3,000 expense limit for one person.
5. Put more into a dependent care FSA
For 2026, the federal cap on an employer’s dependent care flexible spending account, or FSA, rose to $7,500 from $5,000, though your employer must adopt the higher limit before you can use it. Contributions come out of your paycheck before taxes.
If open enrollment is still in progress at work, that is usually the time to sign up or raise your contribution for 2027.
The account follows the same qualifying-person rules as the credit, so the parent generally must live with you and be unable to care for themselves. Money run through the account reduces the expenses you can use for the credit, so the same cost cannot be counted twice.
6. Sign a multiple support agreement with siblings
When siblings share a parent’s expenses, it is common for no one to pay more than half, which can prevent anyone from claiming the parent. A multiple support agreement can fix that.
If the siblings together provide more than half of the support, any one sibling who paid more than 10% can claim the parent. The other siblings who each contributed more than 10% sign a statement agreeing not to claim the parent, and the sibling taking the dependent exemption attaches IRS Form 2120 to the return.
The agreement also determines who may take the medical deduction. Under Publication 502, medical bills paid by the other siblings in the agreement cannot be deducted by anyone. Families facing large medical expenses may want the sibling who pays those bills to be the one who claims the parent.
Paying one sibling for hands-on care is a separate matter. Without a written agreement, those payments can jeopardize a parent’s future Medicaid eligibility.
When the bills reach your nest egg
Some of the heaviest costs in the AARP study came from caregivers who were already under strain. Those who tapped retirement savings spent an average of $17,907 a year on care, or about 49% of their income.
Dementia care averaged $15,846, compared with $10,221 for care without dementia, showing that costs tend to rise as needs increase.
If caregiving has begun to draw on your retirement savings and you have at least $100,000 in investable assets, you can find a financial advisor through Advisor.com to help plan withdrawals, taxes and how long your money needs to last. A tax preparer can also confirm which of the six breaks apply to your 2026 return before you file.
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