There was a basket of tax law changes for children included in the One Big Beautiful Bill Act that many of you might want to review. Here’s a quick summary.
Child Tax Credit
Starting in 2025, the child tax credit is increasing to $2,200 from $2,000. The credit also has a COLA (cost-of-living adjustment) attached.
Dependent Care
The bill, which will take effect in 2026, increases the dependent care flexible spending account limit to $7,500 from $5,000. Note that the bill also raises the maximum percentage of qualified expenses for dependent care from 35 percent to 50 percent.
American Family Account
The government will make a one-time $1,000 payment into an account for babies born between 2025 and 2028. Note: Parents can add up to $5,000/year. No withdrawals are allowed before age 18.
529 Expansion
The bill extends the 529 umbrella to cover non-tuition expenses related to elementary or secondary school attendance. In addition, starting in 2026, the cap for tuition-related expenses increases from $10,000 to $20,000.
If you’re looking for more information, please let me know. I can pass along whatever I have on the new rules for kids.