Contributed by: AndyS, FreeTaxUSA Agent, Tax Pro
Congratulations on your new baby! A new child can bring a lot of wonderful changes to your life, including possible tax benefits. You may now qualify for credits you couldn’t claim before. In some cases, you may also be able to use a different filing status and get a larger standard deduction. Here are some credits and tax benefits you may be eligible for:
1-Child Tax Credit
The Child Tax Credit (CTC) is probably the tax break most people think of when they have a child under age 17. The One Big Beautiful Bill Act (OBBBA) recently increased the credit to $2,200 per qualifying child. It also requires both the child and at least one parent claiming the child to have valid Social Security numbers.
The CTC is a non-refundable credit, which means it can reduce the tax you owe, but it may not increase your refund by itself. However, up to $1,700 of the credit may be refundable through the Additional Child Tax Credit (ACTC), which can help increase your tax refund. Many states also offer their own child tax credit.
2-Child and dependent care credit
If you paid for childcare so you could work or look for work, the Child and Dependent Care Credit may help. This credit allows you to claim up to $3,000 of childcare expenses for a qualifying individual or up to $6,000 for two or more qualifying individuals. There are requirements that need to be met to qualify.
The credit amount depends on how much you paid for childcare during the year and your Adjusted Gross Income (AGI). Starting in 2026, the One Big Beautiful Bill Act (OBBBA) increased the maximum credit percentage from 35% to 50%. It also raised the income thresholds for the percentage of expenses that count for the credit, which may allow families to qualify for a higher credit.
3-Earned Income Tax Credit
Not everyone qualifies for the Earned Income Tax Credit (EITC) but having a child can make it easier to qualify if you have earned income. Claiming a qualifying child raises the income threshold, which means more people may qualify. Many states also offer their own version of this credit.
4-Head of household filing status
If you’re unmarried and have a child, you may be able to use the head of household filing status instead of the single filing status. This usually gives you a larger standard deduction, which can lower your tax bill.
Only one person can claim head of household for the same dependent. If both parents are involved, you'll need to determine which parent qualifies. The IRS has a helpful tool that can help you determine if you qualify for head of household filing status.
5-Trump Account
While it isn’t a tax credit, a Trump Account is a new benefit that may help your child save for the future. A Trump Account is a savings account designed to help children start building money early. New babies born in 2025 through 2028 may qualify for an initial $1,000 contribution from the government. This will help them get started building their retirement savings.
You can open this type of account for older minor children as well, but they won’t receive the additional $1,000 contribution.
See our articles What is a Trump Account? and Trump Account launch July 4, 2026-here's what you need to know.
6-Qualified tuition program
A qualified tuition program (QTP) is also called a 529 plan. It’s a special savings account which helps families save for education expenses in the future. You can’t deduct contributions on your federal tax return, but some states offer a tax break if you use your state’s plan. Earnings generally aren’t taxable as long as withdrawals are used for qualified expenses.
Making the most of your new tax benefits
New babies can come with many tax advantages. Hopefully, this helps you prepare for your upcoming tax returns and understand what you can do to optimize the tax benefits available to you.