Family First Act Proposes $4,200 Child Tax Credit, New Pregnancy Credit, Eliminates Head of Household & SALT Deductions Starting 2026

The Family First Act proposes a significant overhaul of several key tax provisions primarily affecting families, set to take effect for taxable years beginning after December 31, 2025. This legislation aims to expand financial support through enhanced tax credits for children and pregnant mothers, simplify the Earned Income Credit (EIC), but also eliminates some long-standing deductions and filing statuses, including the Head of Household status and the individual deduction for State and Local Taxes (SALT).

Boosting Family Credits: More Cash for Kids and Expecting Parents

The centerpiece is a permanent expansion of the Child Tax Credit (CTC), moved to Section 36C of the tax code and made fully refundable. The proposed credit increases to $4,200 for each qualifying child under age 6 and $3,000 for children aged 6 through 16 (under 17). A family could claim this for up to six children. However, there's an income floor: taxpayers earning less than $20,000 see a reduced credit, calculated as their income divided by $20,000. The credit phases out for higher earners, reducing by $50 for every $1,000 earned above $400,000 for joint filers and $200,000 for others. You'll need valid Social Security Numbers for yourself and each child claimed.

A new Tax Credit for Pregnant Mothers (Section 36D) is introduced, offering up to $2,800 per qualifying unborn child. Eligibility requires the child to have a gestational age of at least 20 weeks, confirmed by a physician's certification submitted with the tax return. Similar to the CTC, this credit is reduced for those earning less than $10,000 (prorated) and phases out above the same $400,000/$200,000 income thresholds. Notably, the credit is disallowed if the pregnancy ends due to an induced abortion, unless it was related to saving the mother's life or treating an ectopic pregnancy.

Tax Code Shake-up: Simplified EIC, Eliminated Benefits

The Earned Income Credit (EIC) gets a makeover under Section 201, aiming for simplification. It sets new maximum credit amounts: $4,300 (single) or $5,000 (joint) for taxpayers with one or more qualifying children, and $700 (single) or $1,400 (joint) for those without. The credit percentage for those with children is set at 25%, phasing out at a 10% rate above certain income levels (starting at $33,000 for those with children).

However, the Act also removes some familiar tax benefits. Section 202 eliminates the additional personal exemption historically allowed for dependents. More significantly, Section 203 completely eliminates the Head of Household filing status. This means individuals previously using this status (often single parents) would likely file as 'Single', potentially facing a lower standard deduction and different tax brackets, which could result in higher taxes.

Rethinking Deductions and Dependent Care

The popular State and Local Tax (SALT) deduction faces elimination for individuals under Section 205. Taxpayers would no longer be able to deduct state and local income, sales, or property taxes on their federal returns, unless those taxes are tied directly to carrying out a trade, business, or income-producing activity (like rental property). This change could significantly increase the federal tax burden for residents in states with higher tax rates, particularly homeowners.

Finally, the Child and Dependent Care Tax Credit (Section 21) sees adjustments in Section 204. While the qualifying age is raised from under 13 to under 17, a new restriction is added: expenses for care provided outside the taxpayer's home only qualify if the dependent spends at least 8 hours per day in the taxpayer's home. This could potentially limit the credit's utility for parents relying on full-time care centers if the child doesn't meet this residency threshold.

In short, the Family First Act presents a mixed bag starting in tax year 2026: potentially larger refundable credits for families with young children and expecting mothers, but also the removal of significant deductions and a filing status that could raise taxes for others, particularly single parents and those in high-tax states.