Bill could have new parents asking, 'Who's my little tax credit?'

They’re calling it a “baby bonus.”

Minnesota currently has a child tax credit that allows taxpayers a credit equal to $1,750 per child, up to age 17. But that credit would increase by $400 for each child born during the taxable year under HF2254, a bill sponsored by Rep. Jessica Hanson (DFL-Burnsville).

“This robust credit for families with newborns is a meaningful investment in young families when their children are at a crucial moment in their lives,” Hanson told the House Taxes Committee on Thursday. “Research shows us that income supplements when a child is young can help a child in their future health, education and even their future earnings. About 25,000 children could benefit from this bonus.”

The committee laid the bill over for possible omnibus bill inclusion. It was one of a suite of bills related to the child tax credit that were laid over: HF2502 would increase the credit’s phaseout amounts, while HF2302 would increase the age of eligibility to 18.

HF2254 specifies that the “baby bonus” must be disregarded when calculating a taxpayer’s minimum credit amount, and that the Department of Revenue may establish a process to allow a taxpayer to request an advance payment of the additional amount.

“Having a baby is expensive,” said Alexandra Fitzsimmons, senior policy director for Children’s Defense Fund-Minnesota. “Cost estimates for the first year of a baby’s life are wide-ranging, and include medical costs, cribs, furniture, car seats, baby carriers, strollers, daily care items, feeding supplies, clothing, toys and child care. Estimates fall anywhere between $20,000 and $50,000 for first-year expenses.

“A $400 child tax credit bonus for newborn babies can reduce financial strain on parents and help maintain economic stability for families at a time when family income may be waning due to taking off time from work or cutting back hours to care for the new baby.”

The Revenue Department estimates that the “baby bonus” would reduce the General Fund by $9.7 million in fiscal year 2026, with comparable totals in ensuing years.

Hanson said that she was particularly proud of the bipartisan support her bill has received. The bill has 35 sponsors: 26 DFL and nine Republicans.

“Whether our hometown color is red, blue or purple, this bill is a reflection of what Minnesotans statewide expect us to come together at the Capitol to do,” Hanson said. “When we take off our jerseys and dig in and find the solutions that our communities sent us here to find, we can all bring home something meaningful that families border to border actually need.”