Family caregivers play a vital role in supporting older adults, people with disabilities, and individuals with chronic health needs. Across the United States, many caregivers provide assistance with activities of daily living, meal preparation, medication management, and household tasks. In recognition of this work, several states made changes in 2025 to increase hourly pay for caregivers. These adjustments help reduce workforce shortages, improve retention, and make it possible for families to continue care at home rather than turning to costly nursing homes or residential facilities.

This article reviews the states that raised caregiver pay rates in 2025, explains the reasons behind the increases, and outlines how these changes impact family caregivers and home care agencies.

Why States Are Raising Caregiver Pay Rates

Caregiver wages have historically been lower than the wages offered in other service industries. Many caregivers earn only slightly above minimum wage, despite providing health-related support that is essential to aging in place and avoiding institutional care. Several factors led states to raise hourly rates in 2025:

Workforce shortages: Home care agencies and Medicaid-funded programs have faced difficulty recruiting and keeping staff. Higher pay helps attract more workers into the caregiving field.
Inflation and cost of living: Rising housing, food, and transportation costs pushed states to adjust caregiver pay to match economic realities.
Policy reforms: Some states used Medicaid waivers, budget surpluses, or new legislation to prioritize caregiver compensation.
Pressure from advocates: Organizations such as the AARP and Family Caregiver Alliance highlighted the gap between caregiver wages and the value of their work, pushing lawmakers to act.

States That Increased Caregiver Hourly Rates in 2025

The following states announced or implemented caregiver pay increases this year. While pay rates vary by program, Medicaid waiver, or home care agency, these adjustments represent a major shift in caregiver compensation nationwide.

California

California expanded its In-Home Supportive Services (IHSS) program in 2025 by boosting caregiver pay. The statewide minimum wage increased to $16.50 per hour, but counties with union agreements set caregiver pay rates even higher. Some urban counties now pay caregivers more than $20 per hour. The state also introduced additional stipends for caregivers assisting with dementia care, recognizing the higher stress and training requirements.

New York

New York continued its investment in the Consumer Directed Personal Assistance Program (CDPAP). In 2025, the state raised base caregiver wages to align with regional minimum wage increases. In New York City, caregivers now earn a minimum of $18 per hour, with higher rates available for overtime. Lawmakers also approved a cost-of-living adjustment for upstate caregivers to reduce wage disparities across regions.

Illinois

Illinois raised caregiver wages under its Home Services Program. The hourly rate increased to $18 in 2025, with additional funding set aside for training and employee benefits. Advocates in the state highlighted that better pay reduces turnover and ensures continuity of care for seniors and people with disabilities.

Texas

Texas historically paid some of the lowest caregiver wages in the nation. In 2025, the state approved a long-awaited increase through its Medicaid waiver programs. Caregiver hourly rates rose from $10.60 to $12.75 on average. While still lower than national averages, this adjustment marked a step forward for thousands of family caregivers providing care under Medicaid-funded services.

Florida

Florida boosted pay rates for caregivers under its Home and Community-Based Services (HCBS) waiver programs. The state set a new standard hourly wage of $15.25 in 2025. This increase aligned with the state’s push to expand home care as an alternative to costly nursing facilities, especially for older adults with long-term care needs.

Michigan

Michigan raised its caregiver pay floor to $15 per hour in 2025 through its Home Help Program. Family caregivers enrolled in the program also benefit from this change, making it easier for adult children or spouses to provide care without sacrificing financial stability. The increase was supported by bipartisan legislation and was framed as both an employment and public health priority.

Pennsylvania

Pennsylvania updated its Medicaid reimbursement structure in 2025, allowing agencies to pass along higher hourly pay to caregivers. Average rates rose from $13.50 to $15.75. The state also created a pilot program offering bonuses for caregivers who complete additional dementia care or behavioral health training.

Ohio

Ohio joined the list of states increasing caregiver compensation in 2025, setting a new average hourly rate of $16. The move came after years of advocacy from community organizations. Ohio’s Department of Aging highlighted that the increase is intended to support both agency-employed caregivers and family caregivers providing services through Medicaid waivers.

Massachusetts

Massachusetts has consistently been one of the highest-paying states for caregivers. In 2025, the state raised hourly wages again, with average caregiver pay reaching $20 per hour. The state emphasized wage parity with other healthcare support roles, ensuring that caregiving remains a competitive employment option.

Colorado

Colorado boosted caregiver hourly pay through its Medicaid HCBS waivers. Rates increased to an average of $17 per hour in 2025. The state also expanded paid training opportunities, allowing caregivers to earn while they learn skills related to medication management, nutrition, and mobility support.

Regional Trends in 2025 Caregiver Pay

When reviewing the changes across states, several regional trends emerge:

West Coast states like California and Oregon continue leading with the highest hourly rates, reflecting strong labor advocacy and higher costs of living.
Northeastern states such as New York and Massachusetts are also raising wages aggressively, often above $18 per hour.
Midwestern states like Illinois, Michigan, and Ohio are moving closer to the $15–$18 range, showing steady progress.
Southern states such as Texas and Florida remain below national averages, but their increases represent meaningful steps for caregivers who previously earned very low wages.

Impact on Family Caregivers

For family caregivers, these wage increases carry several important benefits:

Financial stability: Higher hourly rates mean families providing care can cover more of their own expenses without taking on debt.
Employment balance: Some caregivers can reduce outside employment, focusing on caregiving as a primary source of income.
Reduced stress: With improved compensation, caregivers face less financial pressure, supporting their own mental health.
Better access to support services: Some states tie wage increases to new benefits, such as respite care, training, or tax credits, which further ease caregiver responsibilities.

Challenges That Remain

While 2025 marked progress, challenges remain across the country:

Uneven pay: Rates still vary widely by state, county, and program. A caregiver in Massachusetts may earn $20 per hour, while another in Texas earns under $13.
Limited Medicaid funding: Many increases depend on state Medicaid budgets, which may fluctuate in future years.
Workforce shortages continue: Even with higher pay, demand for caregivers often outpaces supply, particularly in rural areas.
Family caregivers excluded: In some states, family members still cannot be paid under Medicaid programs, leaving gaps in compensation.

Looking Ahead

As the U.S. population ages, caregiver wages will continue to be a central issue in long-term care policy. States are recognizing that investing in caregivers saves money in the long run by reducing nursing home admissions and supporting community-based care.

The 2025 increases in states like California, New York, Illinois, and Massachusetts highlight a growing trend: treating caregiving as essential work deserving fair pay. Families providing care should monitor their state’s Medicaid programs, home care agencies, and legislative updates to understand what financial support is available.

Paid caregiving is no longer just a side conversation in health policy—it is becoming a cornerstone of how states manage long-term care needs. The changes in 2025 show that progress is possible, but continued advocacy will be necessary to ensure caregivers across all states receive fair compensation for their essential contributions.

FAQs

States raised caregiver pay in 2025 to address worker shortages, rising living costs, and pressure from advocacy groups. Lawmakers also recognized that higher wages keep caregivers in the workforce and reduce the reliance on nursing homes, which are often more expensive for state Medicaid budgets.
In 2025, California, Massachusetts, and New York stand out for offering the highest caregiver hourly rates. In some regions, caregivers now earn $18–$20 per hour. These states link caregiver wages to union agreements or regional cost-of-living adjustments, keeping pay competitive with other healthcare support roles.
In many states, yes. Programs like Medicaid waivers, IHSS in California, and CDPAP in New York allow family members to receive pay for providing care. However, eligibility depends on state policies, background checks, and the type of care provided. Family caregivers should review their state’s program details to confirm if they qualify.
Future increases depend on state budgets, Medicaid funding, and legislative priorities. While many states plan to continue raising wages, others may pause or adjust rates based on available resources. Advocates encourage family caregivers to stay informed about policy updates and participate in community organizations that push for fair pay.

Which States Increased Caregiver Hourly Rates in 2025?