$2,000 Caregiver Tax Credit and $25M Housing Grants Aim to Support Multigenerational Families

This legislation aims to tackle two huge challenges facing many families today: the cost of caring for aging parents and the lack of affordable housing options to keep families together. The bill establishes a new federal tax credit and authorizes federal grant money to help build housing specifically designed for multigenerational living.

The $2,000 Tax Break for In-Home Care

Section 2 of the bill creates the "Multigenerational Home Caregiver Credit," a $2,000 tax credit for individuals who provide in-home care for certain older relatives. Think of this as a direct thank you from the government for taking on the demanding job of caregiving. To qualify, you must be the caregiver and share a home with the relative for at least six months of the year. The relative must be at least 55 years old and require significant assistance, meaning they are unable to perform at least one "activity of daily living" (like dressing or feeding themselves) and three "instrumental activities of daily living" (like managing finances or preparing meals).

This credit is specifically for parents, grandparents, and in-laws, and the care provided must amount to at least 10 hours per week. The catch? You need a signed attestation from a licensed health care provider confirming the relative’s condition and need for care, which you’ll file with your tax return. The credit applies to tax years starting after December 31, 2026.

Who Gets the Full $2,000?

Like many tax benefits, this one starts to shrink if your income is too high. The $2,000 credit is reduced by 1% for every dollar your Adjusted Gross Income (AGI) exceeds $75,000. For example, if your AGI is $85,000, you’ll lose 10% of the credit, bringing it down to $1,800. This means the biggest financial relief is aimed squarely at lower and middle-income families who are often stretched thin by caregiving costs.

There’s also a rule designed to prevent family feuds: if multiple people could claim the same relative, only the person with the highest AGI gets to claim the credit. While this prevents double-dipping, it could cause some friction among siblings, especially if the person providing the most hands-on care is the one with the lower income.

Building Housing for the Whole Family

Beyond the tax break, Section 1 authorizes $25 million annually from 2024 through 2028 for competitive grants administered by the Department of Housing and Urban Development (HUD). These grants go to states, local governments, and non-profits to fund the construction or renovation of housing specifically for multigenerational living. This includes building new Accessory Dwelling Units (ADUs)—those backyard cottages or in-law suites—or renovating existing homes to create separate, accessible living spaces.

This is a big deal for families struggling to find affordable ways to keep their elders close. To get the money, applicants must commit that the housing units will be occupied by a multigenerational household (defined as an adult 55 or older living with a related adult child or grandchild) for at least 10 years. The bill also mandates that at least 20% of this funding must go to projects in rural areas, recognizing that housing needs aren't just a big-city problem.