Add the sugar and 2/3 cup of the water to a medium saucepan over medium heat.
1 cup water, 1 cup granulated sugar
Stir until the sugar is dissolved and the mixture comes to a rolling boil.
Stop stirring, cover the pot with a lid, and allow it to boil for another 20 minutes. We want the color to be a little amber which means that it is developing that caramelly flavor.
Once the syrup is reduced and has reached out desired color, check the images. Remove from the heat and add in the warmed-up water that was left over.
Stir to combine then add in the vanilla extract and caramel extract if using.
1 tsp vanilla extract, 1/4 tsp caramel extract
Store in a clean jar in the fridge once the syrup has cooled down for up to 1 month.