Newborn Tax Credit Act Exposed

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The Newborn Tax Credit Act does not include adoption or approval information, but it was included in ALEC's 1995 Sourcebook of American State Legislation. ALEC has attempted to distance itself from this piece of legislation after the launch of in 2011, but it has done nothing to get it repealed in the states where it previously pushed for it to be made into law.

ALEC Bill Text


This act provides for a refundable tax credit in the amount of ten percent of the taxpayers earned income for a child that is born during the taxable year, not exceeding $10,000.

Model Legislation

{Title, enacting clause, etc.}

Section 1. {Title.}

This Act may be cited as the New Born Tax Credit Act.

Section 2.

(A) Section (insert section and all appropriate chapters and subchapters) of the Revenue Code is amended by redesignating (insert section) as section (insert new section) and by inserting after (insert section) the following new section.

(Redesignated section) In the case of an individual there is allowed as a refundable credit for the taxable year an amount equal to the dependent tax credit amount for the taxable year.

(B) For the purposes of this Section:

(1) the newborn tax credit amount for the taxable year is an amount equal to the sum of the applicable credit percentages of so much of the taxpayer’s earned income as defined in (section) for such year as does not exceed $10,000.
(2) for the purposes of Paragraph (l), the applicable credit percentage is 10 percent for each qualified dependent child.
(3) in the case of a taxpayer whose income as defined in (section) exceeds $35,000, the amount determined under paragraph (B)(l) shall be reduced by $1 for each $10 of income in excess of $35,000.

(C) For the purposes of this Section the term “qualified dependent” means any individual:

(1) who is a dependent (as defined in section 152 of the Internal Revenue Code) of the taxpayer;
(2) who is a child (as defined in section 15(c)(3) of the Internal Revenue Code) of the taxpayer whose date of birth was during the taxable year. Such term does not include any dependent of an individual receiving aid or assistance under Part A or Part E of Title IV of the Social Security Act.

(D) In the case of an individual who is legally married, this section shall apply only if a joint return is filed for the taxable year.

(E) Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months.


(1) The amount of the credit allowed by this Section shall be determined under tables prescribed by (insert appropriate agency).
(2) The tables prescribed under Paragraph (B)(l) shall reflect the provisions of Subsections (A) and

(B) and shall have income brackets of not greater than (insert amount) each for earned income between $0 and the amount of earned income at which the credit is phased down to the amount applicable under Subsection (B)(3)(c).


(1) In the case of any taxable year beginning after (insert year), the $10,000 and the $35,000 amounts in Subsection (B) shall be increased by an amount equal to:
(a) such dollar amount, multiplied by
(b) the cost-of-living adjustment determined for the calendar year in which the taxable year begins.
(2) If any increases determined under Paragraph (B)( 1) is not a multiple of $10, such increase shall be

rounded to the nearest multiple of $10.

Section 3. {Severability clause.}

Section 4. {Repealer clause.}

Section 5. {Effective date.}

Volume I: Sourcebook of American State Legislation 1995 403