Developing tax policies that support fertility is an effective strategy for fostering a fertility-friendly society and represents a key area for advancing reforms to individual income tax. Using data from the China Family Panel Studies (CFPS) from 2020 and 2022, this paper empirically investigates the impact of the special additional deduction for children’s education in individual income tax on fertility intentions.

The study reveals that the tax-reduction incentives of the policy are conducive to enhancing fertility intentions. The special additional deduction for children’s education is one of the effective drivers for implementing the “comprehensive two-child” policy, while its supportive effect on the “three-child” policy is not evident at present. Heterogeneity analysis indicates that tax-reduction incentives have a more significant impact on families in the central and western regions, as well as on middle-income families. Regarding the internal mechanism, tax-reduction incentives can boost fertility intentions through two channels: improving the family atmosphere and optimizing retirement investment planning.

This paper has the following contributions: (1) From the research perspective, it innovatively employs the latest micro-data to investigate the impact and mechanism of tax-reduction incentives from the special additional deduction for children’s education on fertility intentions, enriching the research perspective on the relationship between taxation and family fertility, and offering insights for future research. (2) In terms of research design, it uses the policy as a starting point to explore the impact of tax-reduction incentives during the initial implementation phase of the policy on fertility intentions, providing empirical evidence for future policy optimization. (3) Regarding research significance, it aids in strengthening public attention on fertility-supporting tax systems and enhances the coordinated implementation effect of tax systems and fertility policies. Additionally, it proposes more practical policy optimization suggestions, such as differentiated standards, improvement of the pension security system, and strengthening of policy coordination.