What the Big Beautiful Bill Means for Family Caregivers

What the Big Beautiful Bill Means for Family Caregivers

The One Big Beautiful Bill Act, signed into law on July 4, 2025, represents one of the most significant legislative changes affecting family caregivers in decades. For the 63 million Americans providing care to aging loved ones, this law delivers a mixed package—meaningful tax relief on one hand, and concerning cuts to the safety net programs your parent may rely on for care on the other.

Understanding both sides of this equation isn't just helpful—it's essential for making informed decisions about your family's caregiving journey.

Top 3 Key Takeaways

1. Paid leave support expanded: The new law expands and makes permanent a federal tax credit that provides incentives to businesses—particularly small ones—to offer workers up to 12 weeks of paid time off for family and medical leave, which can be used to care for aging parents with serious health conditions.

2. Seniors get tax relief: Americans ages 65 and older can claim an extra standard deduction of $6,000 through the 2028 tax year—your aging parent may benefit, and so will you when you reach that milestone.

3. Medicaid cuts may strain care options: The law cuts over a trillion dollars from Medicaid, Medicare, and the Affordable Care Act, potentially reducing home and community-based services that help aging adults remain at home.

The Good News: Caregivers Finally Get Some Recognition

Here's the thing—for years, family caregivers have been the invisible backbone of our healthcare system, juggling jobs and doctor's appointments, finances and feeding tubes. This legislation acknowledges that reality in some meaningful ways.

Paid Family and Medical Leave Gets a Boost

America's working family caregivers may get better access to paid time off to care for their loved ones under the new provisions. The law expands and makes permanent a federal tax credit that provides incentives to businesses—particularly small ones—to offer workers up to 12 weeks of paid time off for family and medical leave.

The tax credit ranges from 12.5 to 25 percent of the wages paid to employees while they are on paid leave, depending on how generous an employer is with the pay.

Why does this matter? Seventy percent of working-age caregivers are navigating the dual responsibilities of paid employment and caregiving. If your employer has been reluctant to offer paid family leave, this enhanced tax credit gives them more incentive to do so.

What you can do: Ask your HR department whether your company plans to take advantage of the enhanced PFML tax credit. The conversation is worth having—especially if you anticipate needing time off to care for your aging parent.

Tax Relief for Aging Parents (and Eventually You)

Your parent may see direct tax benefits from this legislation. The law adds a 65-plus bonus deduction of $6,000, available through the 2028 tax year. Unlike the standard deduction, older taxpayers can take this bonus deduction whether they itemize or not.

The full deduction is available to taxpayers age 65 and older with a modified gross adjusted income of up to $75,000 for an individual filer and $150,000 for a couple filing jointly.

For example, in 2025 a 65-plus married couple with a combined income of $120,000 can take the standard deduction ($31,500 for joint filers), plus the existing age-related addition ($3,200), plus the new bonus ($6,000 each), reducing their taxable income by $46,700.

Enhanced Dependent Care Benefits

If you're paying for care services for your aging parent, there may be additional relief coming. The Child and Dependent Care Tax Credit jumps from 35% to 50% of qualified expenses. Despite its name, this credit can apply to dependent adults who require care.

The law also increased the amount of pre-tax income businesses can allow their workers to set aside tax-free for care expenses from $5,000 to $7,500, often through a dependent care flexible spending account. This change goes into effect in 2026, so talk with your employer about maximizing this benefit during open enrollment.

The Concerning Reality: Medicaid Cuts Hit Home

Now for the harder conversation. If your aging parent relies on Medicaid—or might need to in the future—this law introduces significant challenges that could directly affect their care options.

Home and Community-Based Services at Risk

When states have reduced funding, they will find savings by cutting optional programs like home and community-based services (HCBS), which account for over half of all optional Medicaid spending. Older adults and people with disabilities of all ages rely on HCBS to receive crucial services in their homes. Cutting HCBS will strain family caregivers and force individuals into nursing homes and other institutions as their only option for long-term care.

This is perhaps the most significant concern for caregivers. Home-based services—like personal care aides, adult day programs, and respite care—are often considered "optional" under Medicaid, making them vulnerable to state budget cuts. If you've been counting on these services to help keep your parent at home, you may need to develop backup plans.

Work Requirements Add Complexity

The law requires adults ages 19 to 64 eligible for Medicaid expansion to work or volunteer at least 80 hours a month to enroll in and maintain their coverage.

There's a silver lining here: While there are exemptions for parents of minor children up to age 13, some family caregivers, and some people with disabilities, these are narrowly defined and will require verification.

Most Medicaid enrollees ages 50-64 are working or could be exempt from the work requirements because of a disability or caregiving responsibility, but they will still need to comply with reporting requirements, putting them at risk of losing Medicaid coverage.

What This Means for Your Caregiving Budget

The law introduces various tax and financial provisions, making it essential for you to review your estate plans, tax strategies, and long-term care arrangements with a trusted advisor.

Much of the debate has focused on work requirements for Medicaid. But most Medicaid adults under age 65 are already working. Less attention has been paid to how Medicaid cuts could impact the long-term care of millions of Americans.

Practical Steps for Family Caregivers

Given this complex mix of benefits and challenges, here's how to position your family:

Review your parent's coverage status. If your parent receives Medicaid benefits or may need them in the future, consult with an elder law attorney to understand how the new rules may affect eligibility. The new rules will make it easier to lose Medicaid coverage, especially through paperwork and procedural mistakes, and increase the need for organized, proactive planning.

Talk to your employer about paid leave. More than 60 percent of family caregivers are balancing caregiving duties with paid jobs. Most working family caregivers are employed full-time while providing hours of care equivalent to those of a part-time job. If your employer doesn't currently offer paid family leave, the enhanced tax credit may change that calculation.

Maximize tax benefits for 2025 and 2026. Help your aging parent claim the new senior deduction. Review whether the enhanced dependent care credit or FSA changes could benefit your family's situation.

Plan for potential service disruptions. If your parent relies on home-based Medicaid services, begin exploring backup options now. Consider what additional support you might need to provide if services are reduced.

Looking Ahead

The Budget Reconciliation Act dismantles critical protections and funding streams that countless older adults, people with disabilities, lawfully present immigrants, and their caregivers rely on. At the same time, the law provides meaningful tax relief that can help offset caregiving costs for many families.

The reality is that this legislation doesn't fit neatly into a "good" or "bad" box. It requires caregivers to be more informed, more proactive, and more strategic than ever.

Your next step isn't to panic—it's to plan. Meet with your parent's healthcare providers to understand their current benefit structure. Consult with financial and legal advisors about how the tax changes and Medicaid rules may affect your family. And stay connected with local Area Agencies on Aging, which can help you navigate these changes as they're implemented.

The caregiving journey has always required adaptability. This law simply makes that requirement more urgent.

Start the conversation with your family today. Understanding these changes now gives you the power to make informed decisions for your aging loved one's care.