Newborn tax credit

(a)

In general

Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section:

36C.

Newborn tax credit

(a)

Allowance of credit

There shall be allowed as a credit against the tax imposed by this subtitle an amount equal to $2,000 for each qualifying child of the taxpayer born during the taxable year. (b)

Qualifying child

For purposes of this section, the term qualifying child has the meaning given such term in section 152(c). (c)

Phaseout

The amount determined under subsection (a) shall be reduced by $50 for every $1,000 by which the modified adjusted gross income (as defined in section 24(b)(1)) of the taxpayer for the applicable taxable year exceeds the threshold amount (as defined in section 24(b)(2)). (d)

Earned income requirement

The amount allowed under subsection (a) with respect to each qualifying child of the taxpayer shall not exceed the amount that is equal to 20 percent of the earned income (within the meaning of section 32) of the taxpayer for the applicable taxable year. (e)

Applicable taxable year

For purposes of this section, the term applicable taxable year means— (1)the taxable year in which the qualifying child with respect to which the credit is allowed under subsection (a), or (2)at the election of the taxpayer, the preceding taxable year. (f)

Advance payment

(1)

In general

At the election of the taxpayer, the Secretary shall, not later than 6 weeks after receiving the information described in section 205(c)(2)(B)(iv) of the Social Security Act relating to a qualifying child of the taxpayer, make a payment to the taxpayer in an amount equal to the amount allowable as a credit to the taxpayer for the taxable year in which such qualifying child is born. (2)

Election to use estimated income

At the election of a taxpayer who has not made the election described in subsection (e)(2), the amount of the advanced payment under paragraph (1) may be determined— (A)by inserting taxpayer’s estimate of such taxpayer’s after by which the in subsection (c), and (B)by inserting taxpayer’s estimate of the taxpayer’s after 20 percent of the in subsection (d). (3)

Reconciliation of credit and advance credit

If the aggregate payments made to the taxpayer under paragraph (1) during the taxable year exceeds the amount of the credit allowed under this section to such taxpayer for such taxable year, the tax imposed by this chapter for such taxable year shall be increased by the amount of such excess. Any failure to so increase the tax shall be treated as arising out of a mathematical or clerical error and assessed according to section 6213(b)(1). (g)

Special rule

Rules similar to the rules of section 24(h)(7)(A) shall apply to this section. (h)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning after 2026, the $2,000 amount in subsection (a) shall be increased by an amount equal to— (A)such dollar amount, multiplied by (B)the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. (2)

Rounding

If any increase under paragraph (1) is not a multiple of $100, such increase shall be rounded to the nearest multiple of $10.

(b)

Information collected by Commissioner of Social Security

Section 205(c)(2)(B) of the Social Security Act (42 U.S.C. 405(c)(2)(B)) is amended by adding at the end the following:

(iv)The Commissioner shall, in carrying out the requirement of subparagraph (B)(i)(IV), require an individual applying for a social security account number on behalf of a child to provide to the Commissioner the following information: (I)The name of the parents. (II)The social security account numbers of the parents. (III)An election as to whether the parents want to receive the newborn tax credit determined under section 36C of the Internal Revenue Code of 1986 through direct deposit or a check in the mail. (IV)An election as to the elections described in— (aa)section 36C(e)(2) of such Code, (bb)section 36C(f)(1) of such Code, and (cc) 36C(f)(2) of such Code. (V)The address of the parents. (VI)In the case the parents elect to receive a direct deposit, any information the Commissioner determines necessary to make the direct deposit. (VII)In the case of parents making an election to use estimated amounts under section 36C(f)(2) of such Code, the amount of the estimates described in such section. (v)The Commissioner shall submit the information received under clause (iv) to the Secretary of the Treasury not later than 45 days after the Commissioner issues a social security account number to the child who is the subject of such information.

(c)

Information for taxpayers

The Secretary of the Treasury, acting through the Commissioner of Internal Revenue, shall provide to each individual described in section 205(c)(2)(B)(iv) of the Social Security Act (42 U.S.C. 405(c)(2)(B)(iv)) plain language guidance— (1)to assist such individual to determine how elections made pursuant to sections 36C(e)(2), 36C(f)(1), and 36C(f)(2) of the Internal Revenue Code of 1986 will affect the amount of the credit determined for such taxpayer for the taxable year, (2)to assist such individual to determine estimated modified adjusted gross income (as defined in section 36C(b)(1) of such Code) and earned income (within the meaning of section 32 of such Code) for the taxable year, and (3)to explain how reconciliation of the advanced credit under section 36C(f)(3) of such Code may affect the taxpayer. (d)

Online portal

The Secretary of the Treasury shall establish an online portal— (1)which provides the information described in subsection (c), and (2)through which a taxpayer may make an election under section 36C(f)(1) of such Code (as added by this section). (e)

Conforming amendments

(1)Section 6211(b)(4)(A) of such Code is amended by inserting , 36C after 36B. (2)Section 1324(b)(2) of title 31, United States Code, is amended by inserting , 36C after , 36B. (3)The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following new item:

Sec. 36C Newborn tax credit.

(f)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2025.