With the new proposal set to add a $100 “baby bonus” to their annual refund, families in one particular state could be receiving a small but rather meaningful boost in their child tax credit. As part of the bipartisan tax package, the additional child tax credit reflects practical policymaking. Although many other tax ideas didn’t quite make the cut, this particular credit increase could be meaningful for many new parents and their children.
More about the $100 “baby bonus” and what it means
It must be noted that this proposed $100 “baby bonus” is not an entirely separate benefit but an enhancement of the existing state child tax credit system. As per current law, many families already receive up to $1,750 per child as part of a refundable child tax credit. The initial program was passed two years ago in an attempt to reduce child poverty considerably by providing direct support to low- and middle-income households.
However, the new $100 bonus would apply specifically to children born in the tax year as a way to provide families with additional help at a point that is deemed the most financially demanding stage of parenting. As has been stated by lawmakers, this credit would be applicable from the start of 2028. Families who will be welcoming newborns in that year and the years thereafter would qualify for the additional amount.
Although the $100 “baby bonus” may not seem like much, it does work to reduce financial burdens for many working families more so as it is layered on top of broader tax benefits. When combined with the current $1,750 credit, the bonus reissues its commitment to helping families.
How does the bonus fit into the larger scheme?
This $100 bonus is a mere component of the wide-ranging tax package that was introduced by Democratic and Republican leaders in the state House of Representatives. This legislation focuses on measures that are likely to receive bipartisan support and directly help families.
The bill also allows for the maintenance of funding for local government aid, provides expanded property tax relief for disabled veterans and their surviving spouses, and directs the state’s Department of Revenue to build a free tax filing service. The free tax filing service could save residents money as well.
According to Rep. Aisha Gomez (DFL-Minneapolis) and Rep. Greg Davids (R-Preston), co-authors of the bill, they did their best to address the community’s needs.
Timeline and implementation of the bonus
At the moment, the broader child tax credit remains in place, however, this $100 baby bonus won’t take effect until 2028. The reason for such a delayed start means that the state has more time to prepare for expansion and incorporation into the budget, which lawmakers are keeping a close eye on due to a projected $6 billion deficit in coming years.
According to this timeline, families with children born before 2028 will not receive the bonus, however, the state has taken the necessary steps to issue advanced payments of the child tax credit starting this year. Therefore, families will still benefit sooner from the refundable $1,750-per-child amount. Lawmakers, as such, have until May 19 to pass the final version of the proposed bill.
Which state qualifies for the baby bonus?
Citizens in the state of Minnesota will qualify for this $100 baby bonus as per HB2437 in Minnesota Legislature. The baby bonus is believed to enhance a child tax credit policy that is often considered one of the most generous in the country. The credit is income-dependent and aimed specifically at low to middle income families. Once implemented, the bonus will offer an additional financial cushion to support families who are welcoming newborns. It is the state’s way of recognizing the costs of early child rearing. Taxpayers need to note this credit and 3 other tax credits that can be claimed on their tax returns.
