Incentivizing the care of adult family members through a two-part tax credit

In the United States, nearly thirty-four million individuals provide informal care for their adult family members each year. Adult care recipients experience positive emotional and health-related outcomes when cared for by relatives, but this responsibility also places significant stress on caregivers. The government should subsidize and encourage family adult care, not only because of these social impacts, but also because this care can reduce healthcare costs. Family caregivers help their relatives avoid expensive institutional care and are also cost-efficient providers of care due to their relationships with the care recipients. The tax code is an effective and politically palatable vehicle through which the government can provide this subsidy, despite some structural limitations. However, existing and recently proposed tax incentives do not adequately target the benefits associated with family caregiving. Therefore, this Note proposes a new two-part advanced refundable tax credit that will help the government reduce costs and enhance social benefits.