Upcoming Tax Benefits for Young Families

Here are some tax benefits available to most young families for the 2025 tax year – 

• Child Tax Credit Expansion 

This credit goes up by $200 and is now $2,200 per child, versus the previously permitted amount of $2,000.  

• Higher Dependent Care Flexible Spending Account (DCFSA) Limit 

For many years, the IRS limited pre-tax DCFSA contributions to $5,000 annually. Beginning in 2026, that limit has been increased 50% to $7,500 annually. This change is for the 2026 tax year, but families can start making larger contributions beginning January 1, 2026. 

• Trump Account Tax Savings 

While open to all U.S. citizens under age 18, the government has allowed every U.S. citizen born between January 1, 2025 through December 31, 2028 to receive a one-time $1,000 pilot program contribution. This amount, along with up to $5,000 of annual contributions, will be housed in a “Trump Account” and will grow in a tax-advantaged manner until the beneficiary turns 18, at which point the account converts to a traditional IRA. The opportunity to get a multi-decade head start on retirement accumulation cannot be overstated, and an election to enroll is available on 2025 tax returns!