ALL IN THE FAMILY Tax reliefs don't drive family formation
US federal tax policy has long supported family formation and sustainability: well up to a point.
https://turbotax.intuit.com/tax-tips/family/tax-exemptions-and-deductions-for-families/L0Nx5Tnxi
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- The Child Tax Credit can reduce your taxes by up to $2,000 per qualifying child aged 16 or younger. If you do not owe taxes, up to $1,700 of the Child Tax Credit may be refundable through the Additional Child Tax Credit for 2024.
- If you adopt a child, you may qualify for the Adoption Tax Credit, a nonrefundable tax credit that allows you to claim a credit of up to $16,810 for qualifying adoption expenses in 2024.
- If you or your dependent is pursuing a degree at a school, you may qualify for the American Opportunity Tax Credit, a partially refundable tax credit of up to $2,500.
- If you paid interest on qualifying student loans during the tax year, you might be eligible to deduct up to $2,500 of that interest with the student loan interest deduction.
This is all small potatoes stuff.
OVER IN THE UK
- Marriage Allowance: You may be able to transfer a portion of your Personal Allowance (the amount you can earn tax-free, currently £12,570 for most people) to your spouse or civil partner, potentially reducing their tax bill by up to £252 per year.
- This is particularly beneficial if one partner doesn't use all of their Personal Allowance (their income is below £12,570) and the other is a basic-rate taxpayer (earning between £12,571 and £50,270).
- It can be backdated up to four years.
- Married Couple's Allowance: If one of you was born before April 6, 1935, you could qualify for the Married Couple's Allowance, which could reduce your tax bill by between £436 and £1,127 a year for the 2025/26 tax year.
- This allowance is income-dependent and tapers off for higher earners, but even very high earners will still qualify for a minimum amount.
- Capital Gains Tax: You can transfer assets to your spouse or civil partner without incurring capital gains tax (CGT), potentially allowing you to utilize both partners' annual CGT allowance when you sell those assets later.
- Inheritance Tax: Assets left to a surviving spouse or civil partner are not subject to inheritance tax, helping to preserve your estate for future generations.
- Pension: Marriage and civil partnerships can have a positive impact on pensions
Potential drawbacks or things to consider
- Independent Taxation: In general, the UK taxes individuals separately, not couples. This means you are each responsible for your own tax affairs and have your own allowances, savings, and tax bands.
- Not Always Automatic: The tax benefits of marriage are not automatic; you need to actively claim them.
- Potential "Marriage Penalty": In some cases, couples with similar incomes can face a higher tax burden when filing jointly compared to filing as two single individuals, particularly for those with very high incomes.
UK POLITICAL PARTY REFORM PROMISES MORE
https://www.bbc.co.uk/news/articles/c5yx062pvlvo
We want to make it easier to have children - Farage
01:00
Kate Whannel
Political reporter
Published 27 May 2025
Reform UK leader Nigel Farage has said he wants to make it easier for people to have children, as he confirmed his party would back more generous tax breaks for married people and scrap the two-child benefit limit.
In a speech in central London, Farage said he wanted to lift the cap "not because we support a benefits culture" but because it would make things easier for lower-paid workers.
If his party wins power, Farage said he would also reverse the government's cuts which saw the winter fuel payment withdrawn from 10 million pensioners.
DO TAX RELIEFS MAKE A DIFFERENCE?
Yes: according to the National Council on Family Relations. But not necessarily in the right way.
Federal tax policies can play a crucial role in promoting families’ health, education, and social mobility outcomes. Although some tax policies (e.g., Earned Income Tax Credit, Child Tax Credit) have provided critical income support for families with children, other tax reforms over the past 40 years have disproportionately benefited wealthy families, further widening income and wealth inequality in the United States. Reforming tax policies to support the flourishing of families across the income spectrum, ensure tax fairness, fund expanded child and family tax benefits, and reduce ethno-racial income and wealth inequality, which holds promise for advancing family well-being.
Not exactly: according to Katherine M. Michelmore, Natasha V. Pilkauskas
RSF: The Russell Sage Foundation Journal of the Social Sciences August 2022, 8 (5) 143-165; DOI: https://doi.org/10.7758/RSF.2022.8.5.07
https://www.rsfjournal.org/content/8/5/143
Demographic shifts over the last half-century have resulted in dramatic changes in family structure. These changes have implications for the social safety net because public assistance programs define families differently. This article focuses on a critical poverty-alleviation policy, the Earned Income Tax Credit (EITC), to document family complexity in the United States. We find that more than 60 percent of children in lower-income families reside in households with ambiguity in tax filing and thus in claiming valuable credits. Tax filing ambiguity driven by family complexity is especially common among households with Black children, highlighting significant racial inequities in the tax treatment of complex families.
The headline seems to be that family formation and sustainability is relatively impervious to fiscal targeting support.
Other societal factors - culture and the economics of divorce - function as drivers of family unit variation in degrees which crowd out fiscal rewards and detriments.