Parents, navigating the tax landscape can unlock significant savings and benefits. As we head in tax season, we’ve compiled the top 10 tax tips for parents, starting with the basics and getting into the more sophisticated tips you may not be aware of.
- Open a Trump Savings Account. New for 2025, children born between January 1, 2025 and December 31, 2028 are eligible for a tax-advantaged "Trump Account": a custodial savings account for minors. The federal government will automatically contribute $1,000 to a qualifying newborn's account, and parents can contribute up to $5,000 per year until the child turns 18. If you have a new baby this year, this is free money.
- Take advantage of the Child Tax Credit. The Child Tax Credit reduces your tax bill dollar-for-dollar. For the 2025 tax year, it's worth up to $2,200 per qualifying child under age 17, depending on your income level.
- Unlock the Child and Dependent Care Credit. Separate from the Child Tax Credit, this Child and Dependent Care Credit helps if you're paying for childcare. You may be eligible for a credit of up to 35% of qualified expenses (capped at $3,000 for one dependent or $6,000 for two or more). Gather receipts and your childcare provider’s tax ID for this valuable credit.
- Explore the Earned Income Tax Credit (EITC). If you have low to moderate income, the EITC can add a valuable boost to your refund. Check your eligibility and claim this credit if it applies.
- Consider adoption-related benefits. You can claim a credit for qualified adoption expenses, up to $17,280 per child for 2025. New for this year: up to $5,000 of this credit is now refundable, meaning you may receive it as a refund even if it exceeds your tax liability. This credit helps cover various adoption-related costs, but income limits apply.
- Save for education with tax-advantaged accounts. 529 plans offer tax-free growth and potential state tax breaks for future education expenses. The rules expanded in 2025 to allow funds to cover additional K-12 costs beyond tuition, including books, online learning materials, and tutoring fees. Contribute early and reap the long-term rewards.
- Leverage a Dependent Care FSA. Many qualifying dependent care expenses, including childcare and summer camps, are eligible for reimbursement through FSAs. This offers significant savings by reducing your taxable income.
- Maximize your Health FSA. Some everyday family expenses—like copays, deductibles, over-the-counter medications, and breastfeeding supplies—qualify for reimbursement through a Medical FSA. Using pre-tax dollars to cover these costs can save you money.
- Investigate a Health Savings Account (HSA). Contributing to a Health Savings Account can offer triple tax benefits: contributions are tax-deductible, the account grows tax-free, and withdrawals for qualified medical expenses are not taxed. For families with predictable or high medical costs, an HSA can be a smart way to set aside funds for healthcare while reducing taxable income.
- Keep track of charitable contributions. If you donate to charities, whether in cash or in-kind, these contributions can be tax-deductible. Many preschools and schools operate as nonprofits, and donations to these organizations may be tax-deductible. Notably, this does not include tuition payments, which are not considered charitable contributions. To qualify for a deduction, you must receive nothing in return for your donation. Keep thorough records of all donations, including receipts and acknowledgment letters from charities. For in-kind donations, like clothes or toys, document their estimated value.
Finally, double-check you've claimed each eligible dependent child on your tax returns based on their Social Security number. Each dependent reduces your taxable income, potentially lowering your tax bill.
Of course, your specific tax situation is unique, so seek personalized advice from a tax professional to maximize your benefits and navigate the changing tax landscape. Hopefully this list provides a checklist to make sure you have your bases covered. With a little planning and awareness, you can turn tax time from a headache to a source of financial relief and support for your growing family.