Once people recognized that the tax code was for more than just collecting money to fund the government, it opened the door to understanding how the rules affect different parts of your situation. One of the most popular areas to understand is taxes and your children. Here are some tax breaks to consider after having kids.

Start a 529 education savings plan

529 education savings plans are a great way to start saving for a baby’s future educational costs. These plans offer investments that grow tax-free as long as the funds go toward eligible education expenses (including elementary and secondary tuition). States administer these plans, but that doesn’t mean you are stuck with the plan available in your home state. Feel free to shop around for a plan that works for you. Starting to save early maximizes the amount of tax-free compound interest you can earn in the 18+ years you have before kids go to college.

Bonus tip for family and friends: Anyone can contribute up to $19,000 to the plan in 2026 for each child! In addition, there is a special provision for 529 plans that allows up to 5 years’ worth of gift contributions at once. This is a great estate-planning strategy for grandparents.

Update Form W-4

Every year, you need to review your tax withholdings, especially if you have dependents. Remember, the birth of a child brings new tax breaks, including the $2,000 Child Tax Credit and the Child and Dependent Care Credit for childcare expenses. These credits can be used now to reduce tax withholdings and increase take-home pay, helping cover the cost of diapers and other needs that come with babies and children.

On the other side of the coin, these benefits fall away as your kids grow older. The Dependent Care Credit is for children under age 13. The Child Tax Credit is available for children under age 17. You must plan accordingly.

Prepare for medical expenses

Having a baby is expensive. So is watching your kids grow up! Fortunately, there are ways to be tax-smart when covering predictable medical and dental expenses. The first step is to pay as many out-of-pocket expenses as possible with pre-tax money. Many employers offer tax-advantaged accounts such as a Health Savings Account (HSA) or a Flexible Spending Account (FSA). So check this out and fund these accounts as much as possible. And while it’s more difficult to claim medical expenses as an itemized deduction, it’s impossible to do so if you don’t keep receipts.

Children can be expensive. Contact our RRBB advisors to make sure you’re getting all the tax breaks you deserve for having kids!