Line an 8×8 inch baking dish with parchment paper, leaving some overhang for easy removal.
In a medium saucepan, combine the milk chocolate chips, butterscotch chips, peanut butter, and unsalted butter over low heat.
Stir continuously until the mixture is smooth and well combined.
Remove from heat and stir in the sweetened condensed milk and vanilla extract until fully incorporated.
Fold in the chopped peanuts and mini marshmallows.
Pour half of the fudge mixture into the prepared baking dish and spread evenly.
Drizzle half of the caramel sauce over the fudge layer.
Pour the remaining fudge mixture over the caramel layer and spread evenly.
Drizzle the remaining caramel sauce on top and use a knife to swirl it into the fudge.
Refrigerate for at least 2 hours or until set.
Once set, lift the fudge out of the dish using the parchment paper overhang and cut into squares.
Variations & Tips
For a fun twist, try using crunchy peanut butter instead of creamy for added texture. You can also substitute the milk chocolate chips with dark chocolate chips for a richer flavor. If you have a nut allergy in the family, consider using sunflower seeds or omitting the nuts altogether. For a festive touch, sprinkle some sea salt on top before refrigerating to enhance the caramel flavor.
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