The stock market continued its bull run, with the S&P 500 up over 1.5% last week. The sudden drop earlier this year is a great example of why advisors recommend staying the course and investing for the long term, instead of reacting to every up and down in the market. If you had pulled out of the market then, you would have missed out on the recovery; the S&P 500 is up over 8% year to date.
If you’re a parent of young children, the new tax law has some benefits for you. First, the child tax credit for children under 17 increases by $200 to $2,200 per child in 2026. The credit phases out starting at $200,000 of income for single filers and $400,000 for married couples.
If your employer offers a Dependent Care Account, or DCA, the contribution limit increases from $5,000 to $7,500 for 2026. These accounts are established during open enrollment for the upcoming year, and are funded by payroll deductions. Unlike medical Flexible Spending Accounts, where the entire amount is available on January 1 for medical expenses, Dependent Care Accounts reimburse childcare expenses up to the amount in the account.
If you have spent the entire $7,500 on summer camp enrollment by February, you can submit receipts for reimbursement, but you’ll receive those reimbursement payments as you fund the account over the course of the year. The advantage of the account is that the funds contributed are not taxed. They are available for children under age 13, and can be used for day care, preschool, before and after care, and summer day camps. Sleep away camps are not eligible for reimbursement. They are also limited by income: both parents must be working or attending school to utilize a DCA. These accounts can also be used for adult day care, if you are caring for elderly parents.
Another tax break you can receive as a parent is for Maryland residents. You can receive a state tax deduction for contributions up to $2,500 per parent per child to the Maryland 529 program. If your income as a married couple is below $175,000, you can get a matching contribution of $250 or $500 annually, in place of the deduction. The state matching funds are also available for grandparents if they and their grandchildren are both Maryland residents.
Your action item this week is to get your back-to-school shopping done.Maryland is waiving sales tax on many items through August 16th.
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CovingtonAlsina is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.