The Joys of Parenting – Tax Edition

Several tax benefits for new parents to be aware of, designed to ease their financial burden:

One of the most significant is the Child Tax Credit (CTC), which allows parents to reduce their federal income tax for each qualifying child under the age of 17. For the 2025 tax year, the credit can be up to $2,200 per child. This is a refundable credit, so even if your tax burden is $0, up to $1,700 will be paid to qualified taxpayers.

Another important tax benefit for new parents is the Child and Dependent Care Credit. Head of Household filers, and Married Filing Joint with income from both parents can receive a credit for up to 35% of childcare costs for 2 children. This credit can offset daycare, after school activity fees, and in home care for kids 13 and younger.

Lastly, new parents should explore the Earned Income Tax Credit (EITC) if they meet certain income requirements. This is another refundable credit, so is a great reason to make sure to file your taxes every year.

By taking advantage of these tax benefits and planning accordingly, new parents can better manage their finances, reduce their tax burden, and provide a more secure future for their growing family.