Many couples have put off plans to procreate.
The latest numbers from the U.S. Department of Health and Human Services show that births hit a two-year low in 2008, dropping almost 10% nationally since 2006. California, Georgia, Illinois, New Jersey and Ohio showed the biggest drops.
Historically, the nation's birthrate has risen and fallen with the economy, plunging to record lows during the Great Depression , booming in the post-World War II years, then dipping again during the stagflation-battered early 1970s.
Tiffany Seigler of Evanston, Ill., understands that uncertainty. "Even though we want them, we just can't afford to have kids," she says. "I hope we can someday, but right now, I just don't think we can."
Research isn't exactly reassuring. The Center for Nutrition Policy and Promotion, a division of the U.S. Department of Agriculture, says a second child born in 2008 will cost middle-income parents $221,190 -- and that doesn't include college. (See "Raising your $221,000 baby.")
But some experts say we might be looking at the numbers from the wrong angle -- that the cost of a child is calculated unfairly unless it also factors in how much a child saves parents.
"This report is only providing one piece of the financial puzzle," says Clint A. Costa, a certified public accountant in Chicago. "It's not balanced with things like the tax credits and deductions parents might be eligible for."
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The real bottom line
No one's suggesting you have a baby just to save on taxes, but Costa says things such as child care credits, dependent exemptions and child tax credits should be considered when prospective parents run the numbers. Taken together, they can knock about a third off the cost of raising a child.Here's a rough breakdown of some numbers Costa says should be considered before hitting the snooze button on your biological clock:
Dependency exemption. Over the next 17 years, parents of a child born in 2009 can deduct at least $3,500 a year from their income, assuming the exemption remains unchanged. But it's likely to rise; Costa projects an average of $4,500 a year. If the parents are in the 25% tax bracket, that's a savings of $19,125. State exemptions vary, but even a $1,250 child exemption in a state with a 5% income tax rate would be worth $1,063 over 17 years.
- Total savings: $20,188.
Child tax credit. The $1,000 child credit is a dollar-for-dollar reduction in taxes owed. Over a child's first 17 years, that's $17,000 saved. Local child tax credits also vary by state. New Yorkers, for example, can claim up to $333 a year.
- Total savings: $22,661 (federal plus average state credit based on New York).
Video: Trouble managing family expenses?
Child and dependent care credits. Although many conditions apply, in general, most child care expenses qualify for an annual $600 per child federal credit until a child reaches age 13. This adds up to $7,800. States also cut parents a break. According to the Tax Policy Center of the Urban Institute and Brookings Institution, the average state credit (.pdf file) is $454 a year. That's $5,902 for 13 years. You can see what your state offers here.
- Total savings: $13,702.
Continued: Parents tend to earn more
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