Connecticut Caregiver Tax Credit 2027: What Grandparent Caregivers Need to Know

Two Recent Changes That Affect Kinship Caregivers

Connecticut enacted two pieces of legislation that directly impact grandparents and relatives raising children. The kinship provisions of House Bill 5004 took effect October 1, 2026, creating a grant for kinship caregivers who accept a DCF emergency placement and adding DCF oversight requirements. DCF must establish grant guidelines by January 1, 2027. Separate state budget revisions increased foster and guardianship board rates. A new Connecticut Family Caregiver Tax Credit applies starting with the 2027 tax year.

These are separate from the federal Child Tax Credit and Credit for Other Dependents that many grandparent caregivers already claim. They layer on top.

House Bill 5004: What Changed in 2026

HB 5004 targeted the DCF foster care and kinship care system specifically:

• Guardianship subsidy amount: The monthly DCF guardianship stipend follows the foster care board rate for the child. Separate state budget revisions increased foster and guardianship board rates.
• A one-time necessities grant of up to $625 for relative or fictive-kin caregivers who accept a DCF emergency placement. It can help cover clothing, food, safety-related purchases, and other necessities; it is a maximum, not a guaranteed fixed payment.
• Updated oversight and reporting requirements for DCF regarding kinship placements

The $625 grant is tied to accepting a DCF emergency placement; the ongoing guardianship stipend has separate approval and licensing requirements. These provisions do not apply to informal or probate-only caregivers without DCF involvement, though the legislation signals broader state investment in kinship care infrastructure.

The 2027 Connecticut Caregiver Tax Credit

Starting with the 2027 tax year (filed in early 2028), Connecticut will offer a nonrefundable state income tax credit for qualifying family caregivers. The credit is 50% of eligible expenses, up to $2,000 per tax year. Federal adjusted gross income must be under $50,000 for single filers, married people filing separately, and heads of household, or under $100,000 for joint filers. The Department of Revenue Services will issue vouchers first-come, first-served, with a statewide annual cap of $1.8 million.

This is not a general credit for ordinary childcare costs. An eligible family member must be your dependent, spouse, parent, or another relative by blood or marriage; live in a private residence rather than a long-term care facility; and need help with at least two activities of daily living, certified in writing by a state-licensed physician, physician assistant, or advanced practice registered nurse. Eligible uncompensated expenses include certain home modifications, equipment, and care services such as a home health aide, respite care, adult day care, or personal care attendant.

Federal Credits You May Already Qualify For

While waiting for the 2027 state credit, grandparents raising grandchildren may already be eligible for these federal tax benefits:

Child Tax Credit (CTC): For the 2025 tax year, if you claim a qualifying child as a dependent and meet the eligibility rules, the federal CTC provides up to $2,200 per child. Up to $1,700 may be refundable through the Additional Child Tax Credit if you qualify.

Credit for Other Dependents: If the child doesn't qualify for the full CTC (for example, if they're 17), a $500 nonrefundable credit may still be available.

Earned Income Tax Credit (EITC): If you have earned income and claim the child as a qualifying dependent, the EITC can provide a substantial refundable credit. The amounts vary by income and number of children.

Child and Dependent Care Credit: If you pay for childcare so you can work, a portion of those expenses may qualify for the federal credit.

Important Caveats

Tax credits require that you claim the child as a dependent on your tax return. If you claim a child as a tax dependent, your household may be used in determining the child's HUSKY MAGI eligibility, so your income can affect the child's eligibility. If you do not claim the child, child-only HUSKY rules generally look at the child's direct income.

Also, receiving TFA child-only cash or DCF guardianship stipends does not by itself disqualify you from tax credits. These benefit programs have separate rules from the tax-credit eligibility tests.

For detailed tax guidance specific to kinship caregivers — including how dependent claims interact with benefit programs — our Connecticut kinship financial help guide covers the practical intersections between benefits and taxes.

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