Senate lawmakers advance an up to $500 newborn tax credit for Hoosier parents

On average, Hoosiers spend more than $12,000 annually on child care for infants, according to the Economic Policy Institute. Some legislators are looking for ways to alleviate cost associated with newborns. A Senate committee advanced a bill Tuesday to establish a tax credit for newborn children.

Senate Bill 497 would create a $500 tax credit per newborn child for eligible taxpayers — or $250 for a married person filing a separate return.

The credit would be available for families earning up to 720 percent of the federal poverty level. This benefit would only be available during the first year a newborn child is eligible for the exemption.

READ MORE: Lawmakers advocate for newborn tax credit, paid family medical leave this session
 

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If passed, Hoosiers with newborns would see the credit reflected in their 2025 tax returns when they file next year.

Advocates for this bill said it would be helpful for Hoosier parents and could offset some of the costs of having a newborn.

Taxpayers who claimed a child for the first time got a one-time $3,000 exemption for that year. This measure would remove that, replacing the additional dependent child exemption $1,500 exemption with the newborn tax credit.

Timoria is our labor and employment reporter. Contact her at tcunningham@wfyi.org.