New Baby? Here's How It Will Affect Your Taxes

You won’t find anyone saying, “we’re having a baby for tax reasons,” but there are some important tax perks that come with having children. In addition to the benefits, there are also some nitty-gritty details to know when you go to file your taxes for the first time as a parent—and this guide will help you navigate that.

 “From tax credits to deductions, these tax benefits not only ease the economic burden of parenting but also serve as a tangible acknowledgment of the vital role families play in society,” says Donna Stefans, Esq, founder of AdviseHer Financial Empowerment, which focuses on wealth growth and preservation, along with tax management.

Whether you're navigating the sleepless nights of a newborn or you’re a seasoned parent wanting to make sure you’re getting the biggest refund possible, read on for expert insight on all things taxes for parents.

Child Tax Credit

The Child Tax Credit is a monetary credit you may be eligible for after you have a kid. It applies per child and each year until they’re 18. 

“The Child Tax Credit provides a tax break for families with qualifying children, even if you don't usually file a tax return,” Stefans says. The specific credit amount usually changes from year to year, but here are the numbers for 2025.

For the 2025 tax year, the credit increased a bit. It’s $2,200 per qualifying dependent child if your modified adjusted gross income (MAGI) is:

• $400,000 or below (married filing jointly)

• $200,000 or below for all other filing statuses 

Stefans adds that if your MAGI exceeds these limits, the credit decreases by $50 for each $1,000 over the threshold. 

So, if you and your spouse make a combined $405,000, for example, you’d receive $1,950 per child. By the time your joint income is in the mid-$440,000s, the credit phases out completely.

Here’s where it gets a little funky. The Child Tax Credit itself is nonrefundable, which means it can only reduce your tax bill down to zero—any extra amount just disappears.

But many families can also qualify for the Additional Child Tax Credit, which is the refundable part of the Child Tax Credit. For 2025, you may be able to get up to $1,700 per child as a refundable credit, depending on your income and how many children you have. If the math on Schedule 8812 shows you qualify, that refundable portion can come back to you as part of your tax refund, even if your actual tax bill was already reduced to zero.

What do you need to qualify for the Child Tax Credit?

Well, it goes without saying that you need to have a child to qualify for the child tax credit, and they need to have a social security number—if you give birth in a hospital, they’ll give you the paperwork needed to get that process started Starting in 2025, you (and your spouse, if you’re filing jointly) must also have a Social Security number that’s valid for work in the US.

Here are the criteria you need to meet to receive the Child Tax Credit, as outlined by Grant Dougherty, EA and founder of Dougherty Tax Solutions.

• The child must be your son, daughter, stepchild, foster child, brother, sister, stepbrother, stepsister or a descendant of any of them (nephew, niece, grandchild, etc.)

• The child must be under age 17 at the end of the tax year

• The child must have lived with you for more than half the year (with special rules for babies born during the year)

• The child must be a U.S. citizen, national or resident alien

• The child must be claimed as a dependent on your tax return

• The child can’t have provided more than half of their own support for the year

• The child can’t file a joint tax return with a spouse unless it’s only to claim a refund

I remember seeing bullet three (your child must have lived with you for more than half the year) and feeling slightly panicked because my son was born in October, so hadn’t technically lived with me for half a year. My frantic late-night Googling is your gain—you can claim any child born in 2025, regardless of when they’re born (even if it’s 11:59 p.m. on December 31).

Stefans also adds that you must have provided at least half of the child's support during the last year. “If the child financially supported themselves for more than six months, they may not qualify,” she says. Unless your kid is a child actor or has a particularly successful lemonade stand, this caveat probably does not apply to your situation, so no need to sweat it.

Who should claim the child if you’re not filing as Married Filing Jointly or are not married?

This is a good question that doesn’t have a super straightforward answer. Only one parent is able to claim the child. If you're not married, that means whichever parent claims the baby on their taxes is really up to you. To help you decide, it can be a good idea to get guidance from a tax professional who’s familiar with your specific situation.

Typically, the higher earner will claim the child because they’ll receive a bigger tax break, which is beneficial to both parents if you share finances. If you don’t live with your child’s other parent, then whoever provides housing for most of the year will claim the child.

In situations of divorce where both parents wish to claim the child, there is a tiebreaker rule, which you can learn more about on the IRS website.

Childcare Credit

You probably knew before you even had a kid that childcare is expensive, but it takes on a whole new reality when you see the rough equivalent of a mortgage payment going to daycare or a nanny every month. While American families will shoulder most of the financial impact of childcare on their own, there are some credits available.

The Child and Dependent Care credit is intended to help offset the costs of childcare, but the credit amount gets a little complicated. Parents can receive a tax credit of anywhere from 20% to 35% of qualifying childcare expenses, with a maximum eligible expense of $3,000 for one child and $6,000 for two or more. While it won't make up for your total childcare expenses for the year, it’s better than nothing. Stefans notes that Form 2441 is the designated form for claiming these expenses.

One of the cool things about the credit is that it applies to working parents as well as those actively seeking employment.

Adoption Credit

Adoption is expensive any way you look at it—thankfully, there's a tax credit available to help offset some of the financial burden.

“For adoptions finalized in 2025, there is a federal adoption tax credit (Form 8839) of up to $17,280 per child,” Stefans says, adding that the 2025 credit applies one time for each adopted child and is generally claimed when you file your 2025 tax return. 

Keep in mind that there are income limits that affect how much parents can claim. Stefans explains that for 2025, the credit begins to phase out if your modified adjusted gross income (MAGI) is above $259,190, and it’s completely phased out once your MAGI reaches $299,190.  Hector Castaneda, a certified public accountant (CPA), explains that these income amounts are the same whether you’re filing as single, head of household or married filing jointly. The adoption credit also doesn't apply to anyone adopting a stepchild, regardless of income. 

For 2025, the credit is now partially refundable (up to $5,000), a big change from 2024. Some families may see part of it show up as an actual refund, while others will mostly use it to reduce the taxes they owe. “You can claim this credit for the expenses of the adoption, such as fees, court costs and attorney fees unless your employer reimburses you. If you do not use up the credit in the year of the adoption, you can carry it forward for five years,” Castaneda says.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is often confused with the Child Tax Credit given its similarities, says Castaneda. The main difference: You don’t need to have children to qualify for the EITC—instead, it’s a refundable credit for low-to-moderate-income workers who meet certain qualifications.

The credit amount is based on your earned income and the number of children you have, with a minimum awarded if you qualify, even if you have no children. 

“Having qualifying dependents can boost the amount of EITC you can claim,” Dougherty says, adding that the tax benefits cap at three dependents. The exact qualifications are too in-depth to list here, but you can learn more about who qualifies for the EITC here. And while a lot of people think the EITC and the Child Tax Credit are mutually exclusive, you can (and should!) claim both if you qualify.

FAQ About Taxes For Parents

What day is tax day in 2026?

First things first: Tax Day 2026 is on Wednesday, April 15, 2026. That means your taxes for 2025 need to be filed by then to avoid a penalty. 

Do I need to change my tax filing status before having a kid?

While your head is swirling with nursery ideas and baby names in the month leading up to your baby’s birth, you’re probably not thinking about your tax filing status. 

If you’re married and filing jointly, you don’t have to worry about changing anything. 

If you’re a single parent or not married to your baby’s other parent, having a child may let you file as Head of Household instead of Single, which Dougherty says usually means a larger standard deduction and better tax brackets. To qualify, you generally need to be unmarried, have your child living with you more than half the year, and pay more than half the cost of keeping up your home. A tax pro or the IRS ‘What Is My Filing Status?’ tool can help you confirm if you qualify.

Can I open a Trump account when I file my taxes?

Yes! According to Whitehouse.gov, when you file your 2025 taxes, there will be a form available to establish a Trump Account for your baby (or qualifying child) and claim the initial $1,000 deposit. For a more detailed breakdown of who is eligible for a Trump Account and how they work, check out our article: Trump Accounts Explained: How to Open One & Get the $1,000 Federal Deposit. 

Are 529 College Savings Plans tax deductible?

When you look at your swaddled baby, college may be a far-off thought (or a thought that makes you burst into tears), but it’s never too early to start planning. A 529 College Savings Plan is a great way for family or friends to contribute to your child’s education. 

529 contributions aren't tax deductible federally, but may be deductible on your state income tax (it varies by state). In the long-term, you can take the money out tax-free to pay for college or related expenses, like technology needed for school.

You can also take that money out early to pay up to $10,000 per year toward private school, and if you’re worried the money will be wasted if your kid doesn’t go to college, recent rule changes let you roll some leftover funds—up to a lifetime max of $35,000—into a Roth IRA for them, as long as the account has been open at least 15 years and you follow the annual contribution limits and other IRS rules. Stefans adds, “Not all states conform to all or any of the Federal rules, so you should check with your state’s 529 Plan [guidelines] before taking action here.”

Regardless of how your baby gets into the world, it’s going to cost at least a little money (we can also help if you decide now is the time to create a family budget). These tax tips and government incentives will help you make sure you’re getting as much money back as you can, which is good because diapers don’t grow on trees.