A 529 plan is funded with after-tax dollars. Earnings grow federally tax-free, and withdrawals for qualified education expenses are federally tax-free. For tax year 2026 the federal K–12 cap is $20,000 per student (it was $10,000 in 2025) and covers tuition plus books, certain tutoring, tests, and other listed K–12 costs. California does not conform: it offers no contribution deduction, and the earnings portion of a K–12 withdrawal is generally California taxable plus an additional 2.5% state tax. See the 529 parent guide for the current expense list and unused-fund options (including 529-to-Roth rollovers).

A Dependent Care Flexible Spending Account (FSA) lets you set aside pre-tax dollars (up to $5,000 for MFJ in 2025, increasing to $7,500 in 2026) to pay for eligible childcare expenses, reducing your taxable income and payroll taxes. However, FSAs must be provided by your employer through a benefits plan, follow a "use-it-or-lose-it" rule (unused funds may be forfeited), and can reduce eligibility for the Child and Dependent Care Credit—ideal for working parents with predictable childcare costs.