How State Caregiver Tax Credits Work and What You Need to Know
What state caregiver tax credits actually cover
State caregiver tax credits reduce the income tax you owe if you pay out of pocket to care for a dependent family member — usually a child, parent, or spouse with a disability or long-term illness. The credit amount and what counts as a may have access to expense vary significantly by state. Some states offer credits only for dependent children in care; others include adult relatives. Some reimburse you for actual expenses; others give a flat dollar amount.
The credit is not the same as the federal dependent care credit, which has its own rules and income limits. You may be able to claim both, but they use different definitions of what counts as care. A state credit typically requires you to have paid someone to provide care — a daycare center, nanny, babysitter, or home health aide — while you worked or looked for work.
Because these credits are state-level, you can only claim one if your state offers it. Not all states do. The ones that do have different income thresholds, maximum credit amounts, and rules about what types of care may have access to. You claim the credit on your state income tax return, not your federal return.
Key Takeaways
- State caregiver tax credits reduce what you owe in state income tax if you paid for care for a dependent family member while you worked.
- Each state that offers a credit sets its own rules about who qualifies, what expenses count, and how much you can claim back.
- You claim the credit on your state tax return, and it is separate from the federal dependent care credit, though you may be able to claim both.
- Your state's tax agency website or a tax preparer can tell you whether your state offers a credit and whether your situation meets the requirements.
Which states offer caregiver tax credits and what they cover
As of now, fewer than half of U.S. states offer a caregiver tax credit. The states that do include California, Colorado, Connecticut, Delaware, Illinois, Maryland, Massachusetts, Minnesota, Missouri, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Vermont, and Virginia, though this list changes as states add or remove programs. Each state's credit has a different name, different income limits, and different rules about what counts as care.
Some states limit the credit to families with children in daycare or preschool. Others include care for aging parents, disabled adult children, or spouses. A few states cover in-home care, adult day programs, and assisted living facilities. The maximum credit amount ranges from a few hundred dollars to several thousand, depending on the state and your income level. Some states phase out the credit as your income rises; others do not.
The easiest way to find out whether your state offers a credit is to visit your state's department of revenue or taxation website and search for "caregiver credit" or "dependent care credit." You can also contact the department directly by phone. A tax preparer familiar with your state's rules can also tell you whether you may have access to and help you claim it.
Income limits and how much you can claim back
Most states that offer a caregiver credit set an income threshold — if you earn above it, you cannot claim the credit, or the amount you can claim is reduced. These thresholds vary widely. Some states set the limit at $30,000 or $40,000 per year; others allow households earning $100,000 or more to claim. A few states have no income limit at all.
The amount you can claim back also depends on the state and your income. Some states let you claim a percentage of what you actually spent on care — typically 20 to 50 percent. Others give a flat credit amount that does not change based on what you spent. A few states tie the credit to the number of dependents you care for or the number of hours of care you paid for.
If you paid $5,000 for daycare in a state that offers a 30 percent credit, you might claim back $1,500 in reduced taxes. In another state with a flat $500 credit, that is all you would receive, regardless of what you spent. Check your state's specific rules to understand what you can actually claim.
What types of care count and what does not
Most state credits cover care provided by a daycare center, preschool, after-school program, or licensed family daycare home. Many also include payments to a nanny, babysitter, or au pair. Some states cover care by a relative who is not a household member — for example, a grandparent who watches your child while you work — but not care by a spouse or the other parent.
Care that usually does not count includes school tuition (even if the school provides before- or after-school care), overnight camps, sports programs, or music lessons. Some states exclude care provided by a dependent you claim on your taxes or by someone you are required to support. A few states do not count care by unlicensed providers, even if you pay them directly.
For adult dependent care, the rules are often stricter. Some states only count care by a licensed home health agency or assisted living facility. Others include adult day programs but not in-home care by a private aide. Read your state's specific rules or ask a tax preparer whether the type of care you paid for qualifies.
How to claim the credit on your state tax return
To claim a state caregiver credit, you will need to gather documentation showing what you paid for care and to whom. Most states require you to report the name, address, and tax identification number (or Social Security number) of the person or organization you paid. You will also need to show that the care was necessary because you worked or looked for work.
Some states have a specific form for the credit; others let you claim it on the main tax return form. Your state's tax agency website will have the form and instructions. If you use tax preparation software, it may ask you questions about dependent care expenses and automatically calculate the credit if your state offers one. If you work with a tax preparer, bring receipts, invoices, or bank statements showing what you paid and to whom.
You claim the credit when you file your state income tax return, usually by April 15 of the following year (or the next business day if April 15 falls on a weekend). If you are owed a refund, the credit reduces what you owe or increases your refund. If you owe taxes, the credit reduces what you have to pay.
How this credit differs from the federal dependent care credit
The federal government also offers a dependent care credit on your federal tax return. The rules are similar but not identical. The federal credit covers expenses for care of a child under age 13 or a disabled dependent of any age, and it requires you to have earned income. The maximum federal credit is $1,050 per year for one dependent or $2,100 for two or more, though the actual amount depends on your income.
Some states' credits are more generous than the federal credit; others are less so. Some states allow you to claim both the state and federal credit on the same expenses; others do not. A few states require you to subtract the federal credit from the state credit, so claiming both does not double your benefit. A tax preparer can help you understand how both credits work together in your situation.
What to do if you think you may have access to
Start by checking your state's tax agency website to confirm that your state offers a caregiver credit and to read the specific rules. Look for a page titled "Dependent Care Credit," "Caregiver Credit," or "Child Care Credit." Write down the income limit, the maximum credit amount, and what types of care count in your state.
Next, gather your records: receipts or invoices from the person or organization you paid for care, proof of payment (bank statements, cancelled checks, or credit card statements), and the provider's name and tax identification number. If you do not have all of this information, contact the provider and ask for a receipt or statement showing what you paid and when.
When you file your state tax return, include the credit form or information required by your state. If you use tax software, it will prompt you for this information. If you work with a tax preparer, bring your documentation and ask whether you may have access to. If you have questions about whether your situation meets your state's rules, contact your state's tax agency directly — most have a phone line or email for taxpayer questions.
Frequently Asked Questions
Can I claim a state caregiver credit if I also claim the federal dependent care credit?
In most states, yes — you can claim both on the same expenses. However, a few states require you to subtract the federal credit from the state credit, so the total benefit is less than if you added them together. Check your state's rules or ask a tax preparer how the two credits interact in your state.
What if I paid a family member to watch my child?
Many states allow you to claim the credit for care by a relative who does not live with you, such as a grandparent or aunt. However, most states do not allow the credit for care by a spouse or the other parent of the child. Check your state's specific rules, as they vary.
Do I need to report the care provider's income to the IRS?
That depends on how much you paid them and whether they are self-employed or work for an agency. If you paid an individual caregiver $2,300 or more in a year, you generally must report it to the IRS and provide them with a Form 1099-NEC. If you paid a daycare center or agency, they handle their own tax reporting. A tax preparer can advise you on your specific situation.
What if my income is above my state's limit?
If your income exceeds your state's threshold, you cannot claim the credit in that state. Some states phase out the credit gradually as income rises, so you might claim a smaller amount even if you are above the base limit. Check your state's rules to see whether a partial credit is available at your income level.
Can I claim the credit for care at overnight camp or a sports program?
Most states do not count overnight camps, sports programs, or music lessons as may have access to care, even if they provide supervision while you work. The credit typically covers daycare, preschool, after-school programs, and in-home care by a babysitter or nanny. Check your state's definition of may have access to care to be sure.