SB2473

SECTION 1. The legislature finds that family caregivers are the backbone of the long-term care system in the State. AARP's 2023 report "Valuing the Invaluable" found that 154,000 residents of the State provide unpaid caregiving services for a loved one. The report finds that each year, these family caregivers contribute nearly one hundred forty-four million hours of unpaid services, estimated at a value of $2,600,000. Caregiving services can range from managing personal finances and transporting for medical visits to providing twenty-four-hour supervision and assisting with bathing, toileting, and dressing so that their loved ones are not prematurely institutionalized and can remain in their homes.

The legislature further finds that nonpaid family caregivers face many physical, emotional, and financial challenges and often balance caregiving with work and other personal responsibilities. A 2021 national study found that, on average, family caregivers spend twenty-six per cent of their income on caregiving services; nearly eight in ten caregivers report having routine out-of-pocket expenses related to caregiving; and that these out-of-pocket expenses average $7,242 per year. The legislature believes that the demands on family caregivers are not isolated family issues and that the State should assist in the delivery of meaningful support and solutions for those that provide unpaid long-term care services in the State.

Accordingly, the purpose of this Act is to establish a tax credit for nonpaid family caregivers.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235‑ Family caregiver tax credit. (a) There shall be allowed to each eligible taxpayer subject to the tax imposed by this chapter a family caregiver tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

(b) The family caregiver tax credit shall be equal to the qualified expenses of the taxpayer, up to a maximum of $5,000 in any taxable year; provided that married individuals filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled had a joint return been filed.

(c) An eligible taxpayer may claim the tax credit for every taxable year or part thereof that the eligible taxpayer provides care to a care recipient during the taxable year; has personally incurred uncompensated expenses directly related to the care of a care recipient; and has not claimed the care recipient as a dependent for the purpose of a tax deduction in the same taxable year. Only one eligible taxpayer per household may claim a tax credit for any care recipient cared for in a taxable year. An eligible taxpayer shall not claim multiple tax credits under this section in a taxable year, regardless of the number of care recipients receiving care from the eligible taxpayer.

(d) The director of taxation:

(1) Shall prepare any forms that may be necessary to claim a tax credit under this section;

(2) May require the taxpayer to furnish reasonable information to ascertain the validity of the claim for the tax credit made under this section; and

(3) May adopt rules pursuant to chapter 91 necessary to carry out this section.

(e) If the tax credit claimed by the eligible taxpayer under this section exceeds the amount of income tax payments due from the eligible taxpayer, the excess of credit over payments due shall be refunded to the eligible taxpayer. All claims for the tax credit under this section, including amended claims, shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provisions shall constitute a waiver of the right to claim the credit.

(f) The department of taxation shall report to the legislature, no later than twenty days prior to the convening of each regular session, on the number of eligible taxpayers claiming the tax credit and the total cost of the tax credit under this section to the State during the past year.

(g) As used in this section,

"Activity of daily living" has the same meaning as defined in section 349-16.

"Care recipient" means an individual who:

(1) Is a citizen of the United States or a qualified alien; provided that for the purposes of this paragraph, "qualified alien" means a lawfully admitted permanent resident under the Immigration and Nationality Act;

(2) Is not covered by any comparable government or private home- and community-based care service, except or excluding kupuna care services;

(3) Does not reside in a long-term care facility, such as an intermediate care facility, assisted living facility, skilled nursing facility, hospital, adult foster home, community care foster family home, adult residential care home, expanded adult residential care home, or developmental disabilities domiciliary home; and

(4) Has impairments of at least:

(A) Two activities of daily living;

(B) Two instrumental activities of daily living;

(D) Substantive cognitive impairment requiring substantial supervision because the individual behaves in a manner that poses a serious health or safety hazard to the individual or another person.

"Care recipient" also refers to a person with a disability as that term is defined under section 515-2.

"Eligible taxpayer" means any relative of a care recipient who:

(1) Has a federal adjusted gross income of $75,000 or less (or $125,000 if filing a tax return jointly); and

(2) Has undertaken the care, custody, or physical assistance of the care recipient.

"Instrumental activities of daily living" has the same meaning as defined in section 349-16.

"Kupuna care services" has the same meaning as defined in section 349-16.

"Qualified expenses" means costs that are directly incurred by the eligible taxpayer in providing care to a care recipient, including but not limited to:

(1) The improvement or alteration to the eligible taxpayer's primary residence to permit the care recipient to live in the residence and remain mobile, safe, and independent, including entrance ramps, safety grab bars by toilets, and the conversion of tubs to accessible showers;

(2) The purchase or lease of equipment and supplies, including but not limited to durable medical equipment, incontinent undergarments, and portable commodes, necessary to assist a care recipient in carrying out one or more activities of daily living; and

(3) Other paid or incurred expenses by the eligible taxpayer that assists the eligible taxpayer in providing care to a care recipient, such as expenditures related to:

(A) Home care aides or chore workers;

(B) Respite care;

(D) Personal care attendants;

(E) Transportation, including but not limited to para-transit service for non-emergency medical transport;

(F) Health care equipment; and

(G) Assistive technology, including emergency alert system and voice activated medication dispensers or reminders.

"Relative" means a spouse, child, parent, sibling, legal guardian, a reciprocal beneficiary as that term is defined in section 572C-3, a partner as that term is defined in section 572B-1, or any other person who is related to a care recipient by blood, marriage, or adoption, including a person who has a hanai or substantial familial relationship to the care recipient."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act, upon its approval, shall apply to taxable years beginning after December 31, 2023.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	2473
THIRTY-SECOND LEGISLATURE, 2024
STATE OF HAWAII