The Stillbirth Tax Credit Creates Parity and Supports Families

One in four pregnancies will end in loss. One in 10 babies born are premature.

One in 160 babies are born still each year. In most states, these small lives are born but not recognized, furthering the pain associated with such a loss.

But in May 2022, Connecticut took steps to correct this. Following Minnesota and Louisiana, and through a bipartisan effort, it passed a $2,500 stillbirth tax credit, the largest in the nation, to mitigate some of the many costs incurred by families. While supporting families financially as they rebuild their lives, this bill also recognizes, importantly, that these lives existed. Connecticut was the third state to pass a stillbirth tax credit, raising questions regarding the need for a federal stillbirth tax credit and associated supporting mechanisms such as stillbirth certificates and paid family medical leave.

The Connecticut Stillbirth Tax Credit passed as part of a larger budget adjustment bill:

“Sec. 412. (NEW) (Effective July 1, 2022, and applicable to taxable years commencing on or after January 1, 2022) A taxpayer shall be allowed a credit against the tax imposed under chapter 229 of the general statutes, other than the liability imposed by section 12-707 of the general statutes, in the amount of two thousand five hundred dollars for the birth of a stillborn child, provided such child would have been a dependent on such taxpayer’s federal income tax return. The credit shall be allowed for the taxable year for which a stillbirth certificate is issued by the State Vital Records Office of the Department of Public Health.”

In most states, stillbirth is defined as the loss of pregnancy at 20 or more weeks gestation, either before or during labor. Approximately 23,500 babies are born still in our country every year, and families experience profound trauma. Many of these families have already paid for nurseries, car seats, and strollers only to learn within hours of their loss that they will also need to pay for burials, genetic testing, and mental health services. These unexpected expenses hit a grieving parent around the same time that they learn that their child will not receive a birth certificate.

My daughter Iris died during labor via a stat C-section. I was put under anesthesia with two heartbeats on the monitors and woke to only my own. Her headstone alone was $3,200, not to mention the plot and the funeral, in addition to grief counseling—which was not covered by insurance. A one-time tax credit would have made a world of difference, and I am so proud that our state is now providing it for the approximately 150 families that will suffer this type of loss in Connecticut every year.

Beyond mitigating some of the financial burden associated with this immeasurable loss, the stillbirth tax credit provides parity by sending a strong message to stillbirth parents—that they too are parents—and their child is recognized by the state.

“The financial burden that falls on these families, who are navigating what is likely the most traumatic event of their lives, is something for which we can and should provide relief,” said Connecticut state Rep. Aimee Berger-Girvalo. “These parents deserve the right to grieve and heal in the manner that works best for them, not simply in a manner they can afford. A credit like this doesn’t eliminate the burden, but it can certainly help.”

Across the country, this type of recognition varies. Thirty-one states issue ceremonial stillbirth certificates in recognition of the loss, but without the tax credit. Other states, such as Arizona and North Dakota, offer a tax deduction, but individuals may not be eligible due to other criteria such as income level.

While first established in 2016, only 65% of eligible loss families in Minnesota are utilizing the credit. To receive the credit in Minnesota, parents must be referenced on the fetal death report and complete the Certificate of Birth Resulting in Stillbirth application, which needs to be notarized and sent to the Office of Vital Statistics.

“The stillbirth tax credit is an important acknowledgment for heartbroken parents that their baby is a valued member of their family and our society. The financial impact can be significant and maybe what enables a family to access mental health or other needed services,” said Star Legacy Foundation Executive Director Lindsey Wimmer. “However, the symbolism is equally beneficial. Many grieving families feel the stigma and taboo that accompanies these deaths and feel alone. Our recognition of this monumental event in their life can provide comfort, validation, and strength in those difficult moments.”

Currently, it is the state that’s providing a credit against state income taxes. Challenges establishing this credit in other states include: hesitancy to provide a credit that should be managed at a federal level; not all states issue the stillbirth certificate; and nine states that do not have state income taxes.

“Any new credit or update to an existing credit has its challenges at the federal level,” said CPA Peter Zarob. “However, retirement, health care, and education credits required much larger reforms and they have been implemented. Broadening the federal tax code to include families who have endured a stillbirth loss is attainable and important. The child tax credit already exists, and updating language for this credit goes a long way at a time when families are financially and emotionally tested.”

The benefit of the stillbirth tax credit far outweighs the challenges to be overcome. A federal stillbirth tax credit would create a much easier pathway for more states to provide this needed respite to loss families. In a broader context, the US has lagged woefully behind other developed countries in reducing our rate of stillbirth and advancing women’s health. Actions like this send a meaningful message to all families that these babies count and deserve the same benefits as their living peers.

This article does not necessarily reflect the opinion of The Bureau of National Affairs, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Brittney Crystal is the founder of the Iris Fund, an organization dedicated to improving women’s health by investing in basic science research, focused on full term and preterm labor, and supporting loss families. She previously worked with Save the Children and the United Nations.

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