The decision on the part of the Supreme Court to overturn Roe v. Wade has triggered a lot of emotions in a lot of people. And while some states have doubled down on their efforts to protect the right to obtain an abortion, others have instituted an immediate ban.
But one state is now making adjustments to its tax code in the wake of the recent decision. And that could benefit some expecting parents.
A new tax break for Georgia residents
The state of Georgia has decided that unborn children can be claimed as dependents on state tax returns. Specifically, any unborn child with a detectable heartbeat can qualify for a $3,000 state income deduction for the 2022 tax year.
To be clear, that deduction is available at the state level only — not the federal level. But still, it could benefit some expecting parents this year.
A tax deduction is not a dollar-for-dollar reduction of one’s tax liability. Rather, what a deduction does is exempt a portion of one’s earnings from taxes.
Some lawmakers are criticizing Georgia for this change to its state tax code, citing the fact that it’s not likely to make a big difference for most residents’ finances. In fact, Richard Auxier, senior policy associate at the Urban-Brookings Tax Policy Center, analyzed the new policy and found that low-income Georgia residents probably won’t benefit at all from this new rule. And moderate and higher earners might benefit minimally to the tune of tens of dollars.
A world of unknowns and questions arise
Georgia lawmakers may have had good intentions when instituting this tax policy change. But it could also open up a huge can of worms.
For example, what happens if a parent carrying a child claims them as a dependent, only to miscarry after the fact? And also, how burdensome will it be for expecting parents to provide proof that a child is on the way?
The Georgia Department of Revenue says residents should expect more clarity on this policy later this year. Until then, expecting parents may not want to start counting their money just yet.
Will other states follow Georgia’s lead?
It’s possible that other states will seek to implement similar changes to their respective tax laws in light of Georgia’s new rule. But whether that puts a notable amount of money back into parents’ pockets is yet to be determined. What’s more, while more states may adopt the policy of letting parents claim unborn children as dependents, we’re unlikely to see that change hit the federal tax code anytime soon.
Expecting parents should prepare accordingly
Bringing a baby into the world can be an incredible but costly experience. Regardless of the tax breaks involved, parents who are carrying babies should take steps to shore up their savings accounts ahead of their arrival. From medical bills to clothing to supplies, there are a host of expenses new parents face, so it’s important to prepare financially.
Those looking to formula-feed their babies may also want to consider stocking up in advance. Though the baby formula shortage that plagued parents earlier this year seems to have eased, parents may want to be vigilant in case supply chains slow down again and formula becomes difficult to find.
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