What to Know About the Pregnancy Tax Credit

While there is no specific federal tax benefit called a “pregnancy tax credit,” the birth of a child triggers eligibility for several tax credits and deductions. These benefits help offset the costs of raising a child. This guide explains the tax relief available to new parents at the federal and state levels, covering the primary credits, relevant deductions, and the steps to claim them on your annual tax return.

Federal Tax Credits for New Parents

Federal tax credits provide financial relief for new parents by reducing tax liability dollar-for-dollar. The primary benefit is the Child Tax Credit (CTC), which for the 2024 tax year provides a credit of up to $2,000 per qualifying child under the age of 17. To receive the full amount, a taxpayer’s modified adjusted gross income (MAGI) must be below $200,000 for single filers or $400,000 for those married filing jointly. The credit is reduced by $50 for every $1,000 of income exceeding these thresholds.

A feature of the CTC is its partial refundability through the Additional Child Tax Credit (ACTC). If the credit amount is more than the taxes you owe, you may receive a portion back as a refund. For 2024, the refundable portion is capped at $1,700 per child and is calculated as 15% of earned income above $2,500. This means families with little to no income tax liability can benefit.

Parents who pay for childcare to work or look for work may qualify for the Child and Dependent Care Credit. This credit helps offset care costs for a child under age 13. Taxpayers can claim a percentage of up to $3,000 in expenses for one child or up to $6,000 for two or more children. The credit percentage ranges from 35% for those with an AGI of $15,000 or less, down to 20% for those with an AGI over $43,000.

The Earned Income Tax Credit (EITC) is a benefit for low-to-moderate-income working families, and having a child can increase the credit amount. For the 2024 tax year, the EITC for a taxpayer with one qualifying child can be as much as $4,213, and up to $7,830 for those with three or more children. Eligibility depends on filing status, number of children, and earned income, with investment income capped at $11,600.

For families choosing adoption, the Adoption Tax Credit can cover qualified expenses like adoption fees, court costs, and travel expenses. For 2024, this nonrefundable credit is worth up to $16,810 per child. The credit begins to phase out for taxpayers with a MAGI above $252,150 and is completely unavailable for those with a MAGI over $292,150.

Tax Deductions and Other Financial Benefits

Beyond direct credits, new parents can find tax savings through deductions. The medical expense deduction allows taxpayers who itemize to deduct unreimbursed medical costs that exceed 7.5% of their Adjusted Gross Income (AGI). This includes pregnancy-related expenses like prenatal doctor visits, hospital bills for labor and delivery, prescribed medications, and breast pumps.

The birth of a child can also change a taxpayer’s filing status, leading to tax savings. An unmarried parent who pays for more than half the cost of keeping up a home for their child may qualify to file as Head of Household. This status provides a larger standard deduction and more favorable tax brackets compared to filing as Single, directly reducing taxable income.

Parents can use tax-advantaged savings accounts for education expenses. A 529 plan allows contributions to grow tax-deferred. Withdrawals for qualified education expenses, such as college tuition, are free from federal income tax. While contributions are not federally deductible, many states offer a state tax deduction or credit for contributions made to their own state’s plan.

How to Claim Tax Benefits for a New Child

Claiming tax benefits for a new child requires securing a Social Security Number (SSN) for the newborn, which is mandatory to claim a child as a dependent. The easiest way to apply is at the hospital when providing information for the child’s birth certificate. This integrates the application with the state’s vital records office, and the Social Security card is mailed within a few weeks.

If you do not apply at the hospital, you must complete Form SS-5, Application for a Social Security Card, and submit it to the Social Security Administration. This process requires original documents and can lead to delays, so the hospital application is recommended.

When filing your annual income tax return, you will use specific forms to claim these benefits on Form 1040. To claim the Child Tax Credit, you must attach Schedule 8812, Credits for Qualifying Children and Other Dependents. For the Child and Dependent Care Credit, you will need to complete and file Form 2441, Child and Dependent Care Expenses. If itemizing deductions for medical expenses, you will report them on Schedule A.

State-Level Considerations

In addition to federal tax relief, many states offer their own tax benefits for new parents that can supplement federal credits. As of early 2025, sixteen states have their own version of a child tax credit, each with unique rules regarding eligibility, credit amounts, and refundability. These state-level credits provide further financial support to families.

The structure of these state credits varies widely. Some states offer a refundable credit, meaning families can receive a payment even if they owe no state income tax. For example, one state might offer a credit per child under a certain age, while another might structure its credit as a percentage of the federal credit. Income thresholds and phase-out rules also differ significantly by state.

Other states provide tax deductions or credits related to dependent care expenses, which often mirror the federal Child and Dependent Care Credit but are applied to state income tax liability. Some states also offer deductions for contributions to their specific 529 college savings plans. Because these benefits are state-specific and change, new parents should check their state’s department of revenue website for current information.