Once Congress and the Executive Branch decided the tax code could do more than simply collect revenue, taxes became a powerful tool for shaping financial outcomes. One of the most popular—and practical—areas where this shows up is parenting. Raising children can be expensive, but the tax code offers a few helpful breaks along the way. Here are some smart strategies to consider.
Start a 529 Education Savings Plan
A 529 education savings plan is an excellent way to begin saving early for your child’s future education costs. Contributions grow tax-free when the funds are used for qualified education expenses, including certain elementary and secondary tuition. While these plans are administered by individual states, you’re not limited to your home state’s offering, so it’s worth shopping around. The earlier you start, the more time you give tax-free compounding to work its magic over the 18+ years before college.
Bonus tip for family and friends: In 2026, anyone can contribute up to $19,000 per child. There’s also a special rule allowing five years’ worth of gifts to be contributed at once, a popular estate-planning move for generous grandparents.
Update Your Form W‑4
It’s wise to review your tax withholdings every year, and it’s especially important when you welcome a new dependent. A new child may qualify you for a $2,000 Child Tax Credit, as well as the Child and Dependent Care Credit for childcare expenses. By updating your Form W‑4, you can reduce your tax withholding and boost take-home pay—helpful when diapers, formula, and daycare start adding up.
Keep in mind that these benefits aren’t permanent. The Dependent Care Credit applies to children under age 13, and the Child Tax Credit applies to those under age 17. Planning ahead can help avoid surprises as your kids grow older.
Prepare for Medical Expenses
From delivery costs to orthodontics and everything in between, medical expenses are a regular part of parenthood. One of the smartest moves is to pay predictable out-of-pocket costs with pre-tax dollars whenever possible. Many employers offer Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs), which can significantly reduce the after-tax cost of medical and dental care.
And while itemizing medical expenses on your tax return can be challenging, it’s impossible if you don’t keep records, so hang on to those receipts.
Having kids is rewarding, but let’s be honest, it’s not cheap. A proactive tax review can help ensure you’re taking advantage of every child-related tax benefit available. Schedule one today by calling our office at 817-488-8939 and give your budget a little breathing room while you focus on raising your family.