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Caring for a loved one, whether it’s an ageing parent, a child with additional needs, or a spouse with a serious illness, can be one of the most meaningful but financially demanding roles you take on.
For people juggling full-time work, running a business, or managing wealth, stepping back from income-generating responsibilities isn’t always an option. That’s why it’s essential to understand the financial impact of caregiving and how to manage it strategically.
From valuable tax reliefs to HSE supports and pension planning, this guide will help you care for your family without compromising your financial future.
The Financial Reality of Caregiving in Ireland
Caregiving could impact your income, career progression, and long-term financial security, including your retirement savings. In Ireland, nearly 300,000 people now provide regular unpaid care ( e.g. to a parent, child, or loved one with a disability or illness), a 50% increase since 2016.
Households caring for a child with a disability face additional costs of around €752 per week, which equates to roughly €39,000 annually, excluding housing costs.
These figures paint a clear picture: without proper planning, caregiving can take a significant toll on your financial future.
Tax Advantages of Hiring a Carer
If you run a business, are self-employed, or work full-time, stepping away from work to provide care isn’t always possible. In these cases, hiring a professional carer can be a practical way to ensure your loved one gets the support they need without putting your income or responsibilities at risk.
Even better, valuable tax reliefs are available for home care costs, making it a smart financial decision as well as a compassionate one.
Tax Relief on Paid Home Care
If you pay for professional home care for a relative, whether through a private carer or an agency, you may be eligible for income tax relief at your marginal rate (up to 40%).
You can claim relief on whichever is lower:
- The actual cost of employing the carer, or
- €75,000 per year for each incapacitated person receiving care.
This tax relief is available if the person receiving care is incapacitated due to a physical or mental disability, and you can provide medical evidence to support the claim.
To qualify, the care must be for a spouse, child, parent, or another dependent relative, and the person must require constant or regular care.
Employer Responsibilities
If you hire a carer privately, you are legally an employer. You must manage contracts, tax, and PRSI. Using an agency removes this burden.
You can find full details on employing a carer on the Revenue website.
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Other Supports and Tax Reliefs
There are some financial reliefs that can help ease the burden:
Carer’s Allowance
A weekly payment for people providing full-time care to someone who needs ongoing support due to illness, disability, or age. It’s means-tested, so your income and assets are assessed. You may still qualify even if you’re working part-time.
Carer’s Benefit
A short-term payment for those who leave work temporarily to provide full-time care. It’s available for up to 2 years and is based on your PRSI contributions, not means. Ideal for people in employment who need to step away temporarily.
Carer’s Support Grant
An annual tax-free lump sum of €1,850 (as of 2025), automatically paid in June to full-time carers receiving Carer’s Allowance, Carer’s Benefit, or who are registered with the Carers Support team. It’s not means-tested.
Home Carer Tax Credit
Worth up to €1,950 (as of 2025), this credit is available to married couples or civil partners where one spouse stays at home to care for a dependent, such as a child or elderly relative. The carer must earn below a certain income threshold.
Dependent Relative Tax Credit
You can claim a €305 tax credit (related to 2025) if you support a relative who is dependent on you due to age or illness, and whose income is below a set limit. This includes elderly parents or adult children with disabilities.
Medical Expenses Relief
You can claim 20% tax relief on qualifying medical expenses for yourself or dependents. This includes GP visits, prescriptions, specialist care, and certain health-related travel or equipment costs.
Deed of Covenant
You can make regular tax-deductible payments to a parent aged 65 or older under a formal deed. The parent may receive the income tax-free, while you get tax relief at your marginal rate, an efficient way to support them financially.
There are specific rules and income thresholds that apply to Deeds of Covenant, so it’s important to assess whether this approach suits your personal situation. Factors like your parent’s total income, their age, and how the payments are structured can all affect eligibility. To learn more, read our article on how to support your parents and save on taxes.
Small Gift Exemption
You can gift up to €3,000 per year per person, completely tax-free under Capital Acquisitions Tax (CAT). It’s a useful way to transfer money to family members, including a parent or carer, without affecting their entitlements.
Supporting your parents financially? Learn more in our blog: How to Financially Support Your Parents and Save on Taxes.
HSE Home Support Service
The HSE provides free home care support for older adults following a needs assessment. This includes assistance with daily tasks such as personal care, mobility, and medication management.
In some areas, families may qualify for Consumer Directed Home Support (CDHS), where a weekly cash allocation is provided to arrange private care with an approved provider. Supports are not means-tested and vary by region, so it’s best to check with your local HSE office.
Read more on the HSE website.
Nursing Home & Extra Care Tax Relief
If you’re paying for a loved one’s full-time nursing home care or round-the-clock nursing at home, you can claim tax relief of up to 40% on the amount you personally pay.
This applies even if part of the cost is covered by the Fair Deal scheme; relief is still available on your own contributions. You can claim through Revenue’s myAccount or on your annual tax return.
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Keep Your Own Finances on Track
Even as a high earner or business owner, caregiving can chip away at your financial resilience if you’re not intentional about protecting your own position.
Here are smart strategies to help you stay financially stable while providing care:
Create a dedicated caregiving budget
Separate day-to-day personal expenses from care-related costs like transport, prescriptions, equipment, and additional support. This makes it easier to track what’s truly needed and identify opportunities to claim relief or reduce waste.
Maintain or build an emergency fund
Unexpected expenses can arise quickly, whether from medical needs, time off work, or other disruptions. A buffer of 3–6 months’ worth of expenses provides peace of mind and reduces your reliance on credit.
Review your insurance protection
Ensure you still have adequate life cover, income protection, and serious illness cover in place, especially if your income has changed. If you’ve paused work or adjusted hours, check whether your existing policies need updating to reflect your new circumstances.
Maximise available tax reliefs
Claim for qualifying medical expenses, carer employment costs (up to €75,000 per year), or nursing home care. Use pension contributions to reduce your taxable income efficiently.
Continue funding your retirement
If you’re self-employed or a company director, consider topping up a Personal Retirement Savings Account (PRSA). Even small, consistent contributions can make a big difference over time, and you’ll benefit from tax relief at your highest rate.
Use structured financial supports
If you’re giving regular financial support to a parent, consider using a Deed of Covenant or taking advantage of the Small Gift Exemption. These tools allow you to help tax efficiently, especially if your loved one is on a limited income.
Get personalised advice
Our financial advisors can help structure your income, business profits, and personal finances to ensure you’re not overpaying tax or underfunding your future, while still supporting your family effectively.
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Caring for a loved one while managing your own financial future can feel overwhelming, but you don’t have to figure it all out alone. Whether you’re looking to support a parent tax efficiently, protect your income, or ensure your retirement plans stay on track, we can help.
If you’re navigating care responsibilities while managing assets or running a business, let us help you structure a plan that balances family and finance. Get a personalised quote today!
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All our content has been written or overseen by a qualified financial advisor. However, you should always seek individual financial advice for your unique circumstances.
