A Trump Account (formally: Money Account for Growth and Advancement, or MAGA Account) is a new federally created savings account for American children established by the One Big Beautiful Bill Act (Pub. L. 119-21, signed July 4, 2025). Children born after December 31, 2024 receive a $1,000 federal seed contribution. Annual contributions are capped at $5,000 per year from all contributors combined. Investments are restricted to U.S. equity index funds. Contributions are after-tax and not deductible. Distributions are available beginning at age 18. The tax treatment of distributions is subject to ongoing IRS implementation guidance.
- Federal seed: $1,000 deposited by the government for children born after December 31, 2024.
- Annual contribution cap: $5,000 total across all contributors for a single child in any given year.
- Contributions are after-tax. No federal income tax deduction for contributions.
- Investments: U.S. equity index funds only. No individual stocks, bonds, international funds, or actively managed funds.
- Distributions available beginning at age 18.
- Distribution tax treatment is subject to IRS implementation guidance. Do not assume tax-free treatment without verifying current IRS guidance.
- Qualified distribution categories (education, first home, business) are defined in the statute but subject to IRS implementation rules.
- Contributions do not reduce current-year federal income tax liability or affect refunds.
- Trump Accounts and 529 plans can be held simultaneously. They are separate account types.
What Is a Trump Account?
A Trump Account is a new type of federally created tax-advantaged savings account for American children. The formal statutory name is Money Account for Growth and Advancement, which produces the acronym MAGA. The accounts are commonly called Trump Accounts after President Trump, under whose administration the One Big Beautiful Bill Act was signed into law on July 4, 2025.
The account is not a traditional investment account. It is a dedicated savings vehicle with specific rules about who can open one, how much can be contributed, where funds can be invested, and when distributions can be taken. Those rules are established by the OBBBA statutory framework, with additional implementation details being set by Treasury regulations and IRS administrative guidance.
As of March 2026, the core structural parameters are confirmed in statute. Several operational details, including the precise tax treatment of distributions and eligibility conditions for the federal seed, remain subject to IRS guidance being finalized.
The $1,000 Federal Seed Contribution Confirmed
Children born after December 31, 2024 are eligible for a $1,000 federal seed contribution deposited into their Trump Account by the federal government. The seed is a one-time deposit. It does not recur annually and cannot be increased by additional federal deposits after the initial seeding.
The $1,000 seed begins compounding from the date it is deposited. For a child born on January 1, 2025 with an 18-year projection at a 7% assumed annual return, the seed alone grows to approximately $3,380 by the time the child reaches 18 — before any additional contributions are counted.
Children born before January 1, 2025 may still open a Trump Account but are generally not eligible for the $1,000 federal seed under the statutory structure as written. The precise age cutoff for account eligibility for pre-2025 children is also subject to IRS guidance.
Annual Contribution Limit Confirmed
Annual contributions to a Trump Account are capped at $5,000 per year. The $5,000 limit applies to the total contributions from all sources combined for a single child in a given calendar year. Parents, grandparents, other family members, and any other persons can contribute, but the combined total cannot exceed $5,000 in any year.
Contributions are made with after-tax dollars. There is no federal income tax deduction for contributing to a Trump Account. This is structurally different from a traditional IRA, where contributions may be deductible, and structurally similar to a Roth IRA, where contributions are also after-tax.
The $5,000 annual limit is not indexed for inflation under the current statutory text. It applies at the same level for each tax year the account is open.
Investment Requirements: U.S. Index Funds Only Confirmed
Trump Account investments are restricted to U.S. equity index funds. This means the account must be held in funds that track a recognized U.S. stock market index, such as the S&P 500, the total U.S. market, or a comparable benchmark. The following are not permitted:
- Individual stocks
- Corporate or government bonds
- International or emerging market funds
- Actively managed mutual funds
- Real estate investment trusts (REITs) held outside a qualifying index fund
- Money market funds or certificate-of-deposit-style holdings
The U.S.-only restriction means a fund tracking the MSCI World Index or a global index that includes non-U.S. equities would not qualify. The restriction applies to the entire account balance, including the federal seed and all contributions.
The IRS and Treasury are responsible for providing guidance on which specific fund structures and index definitions satisfy the U.S. equity index fund requirement. As of March 2026, that guidance was still being developed.
Distributions: Age 18 Minimum Confirmed
Account holders may take distributions beginning at age 18. The age-18 threshold is established in the OBBBA statutory text and is confirmed.
Expected qualified distribution categories Provisional
The OBBBA provision identifies qualified distribution purposes. Based on the statutory structure, these include higher education expenses, a first home purchase, and starting a business. The specific definitions of qualifying expenses within each category, documentation requirements, and whether all or only a portion of each distribution must meet the qualified purpose standard are operational details subject to IRS guidance.
Non-qualified distributions
Distributions that do not meet the qualified purpose standard are expected to be subject to income tax and a potential early distribution penalty. The exact penalty rate and the tax treatment structure for non-qualified distributions are subject to IRS implementation guidance. This is analogous to the treatment of non-qualified distributions from Roth IRAs and 529 plans, but the specific rules for Trump Accounts will be set separately in Treasury regulations.
How Trump Accounts Compare to 529 Plans and Coverdell ESAs
Trump Accounts are a new account type. They do not replace 529 plans or Coverdell ESAs. The three account types can be held simultaneously for the same child. Each has different rules and different strategic uses.
| Feature | Trump Account | 529 Plan | Coverdell ESA |
|---|---|---|---|
| Contribution deduction | None (federal) | State deduction available in many states | None |
| Federal seed | $1,000 (eligible newborns) | None | None |
| Annual contribution limit | $5,000 | No annual federal limit (gift tax rules apply) | $2,000 |
| Investment options | U.S. index funds only | Broad fund selection | Broad fund selection |
| Tax on growth | Tax-deferred (dist. treatment provisional) | Tax-free (qualified education use) | Tax-free (qualified education use) |
| Distribution age restriction | Age 18 minimum | None (any age for education) | None (before 30 for education) |
| Qualified use categories | Education, first home, business (provisional) | Education (broad) | Education (K–12 and college) |
| Non-qualified withdrawal penalty | Pending IRS guidance | 10% plus income tax on earnings | 10% plus income tax on earnings |
| Account transfer / rollover | Pending IRS guidance | Allowed (to another beneficiary) | Limited (to family members under 30) |
For families in states with strong 529 deductions, combining a 529 plan for education expenses with a Trump Account for the federal seed and broader qualified uses may offer complementary benefits. Consult a tax professional familiar with your state's rules before choosing between or combining these accounts.
Trump Account vs. Custodial Account (UTMA/UGMA)
Custodial accounts under the Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) hold assets in a child's name with no IRS-defined annual contribution limits and no investment restrictions. The trade-off is annual taxation of investment growth, including the Kiddie Tax rules for children under age 19 (or full-time students under 24).
| Feature | Trump Account | UTMA/UGMA |
|---|---|---|
| Federal seed | $1,000 (newborns after 2024) | None |
| Annual contribution limit | $5,000 all contributors | No federal limit (gift tax rules apply above $18,000/yr per donor in 2025) |
| Tax on growth | Tax-deferred Confirmed | Taxable annually. Kiddie Tax applies for most minors. |
| Investment options | U.S. equity index funds only | Unlimited — stocks, bonds, real estate, funds |
| Access restrictions | Age 18 minimum | Child gains full control at state majority age (18 or 21) |
| Use restrictions | Qualified uses pending guidance | No restrictions — child can spend freely |
| Revocable by parent? | Pending guidance | No — irrevocable once transferred |
| Impact on financial aid | Pending guidance | Counted as student asset (reduces aid eligibility more than parent assets) |
The key structural difference is tax treatment of growth. UTMA/UGMA accounts produce taxable income each year as dividends and capital gains are realized. Trump Accounts defer that taxation. The UTMA/UGMA advantage is flexibility: no investment restrictions, no age floor on access (beyond state law), and no cap on contributions. These tradeoffs make UTMA/UGMA accounts better suited to high-contribution families or those who want investment freedom. Trump Accounts are better suited to families who want tax-deferred U.S. equity growth and can accept the confirmed constraints.
How Growth Projections Are Calculated Derived
The Trump Account Calculator on this site uses a standard compound growth formula to project account value at age 18. The projections are illustrative only. Actual investment returns will vary.
The calculation uses two components: the future value of the federal seed as a lump-sum present value, and the future value of annual contributions as a series of end-of-year payments.
Contribution future value: FV = PMT × [(1 + r)^n − 1] / r
Total projected value: Seed FV + Contribution FV
Where: r = assumed annual return rate · n = years until age 18
The assumed return rates available in the calculator (3%, 5%, 7%, 8%, and 10%) are not guaranteed. Historical average annual returns for broad U.S. stock index funds have been approximately 7–10% over long time horizons before adjusting for inflation. For conservative planning, 5–6% is a more defensible assumption. All calculator outputs are projections, not guarantees.
What Is Not Yet Confirmed
As of March 2026, the following Trump Account parameters are subject to IRS implementation guidance and should not be assumed without verification:
- Whether the $1,000 federal seed is subject to parental income limits or citizenship requirements.
- The tax rate and penalty applicable to non-qualified distributions at age 18 or later.
- The precise definitions of qualified distribution categories (education, first home, business start) and the documentation required to substantiate each category.
- The rules governing account balances that remain after age 18 if no distribution is taken.
- Whether accounts can be transferred or rolled over to a sibling or other family member.
- The age eligibility cutoff for children born before January 1, 2025 who wish to open a Trump Account without the federal seed.
- The specific fund structures that satisfy the U.S. equity index fund requirement.
Monitor irs.gov for published guidance. The IRS is expected to issue Treasury regulations and formal guidance covering these operational parameters.
Current-Year Tax Impact
Trump Account contributions are after-tax. They do not reduce your federal taxable income for the year in which the contribution is made. A parent contributing $5,000 to a child's Trump Account in 2025 sees no reduction in 2025 federal income tax liability and no change to the expected refund or balance due for TY 2025.
The potential tax benefit of a Trump Account is deferred. It accumulates inside the account over time as tax-deferred growth. Whether and how that growth is taxed at the time of distribution depends on the qualified versus non-qualified distribution rules, which are still subject to IRS guidance.
If you are also taking OBBBA deductions that do affect your current-year tax return, those are calculated separately. The SALT cap increase for TY 2025–2029 is one example: it reduces Schedule A itemized deductions above the old $10,000 cap and can significantly affect your current-year federal tax liability. See our SALT Deduction Increase Guide for details on the itemizing requirement and phase-out rules, and use the SALT Deduction Calculator to estimate your incremental benefit.
Confirmed vs. Pending Guidance
The OBBBA is law, but IRS implementation rules are still being issued. This table separates what is settled from what is pending.
| Parameter | Status | Detail |
|---|---|---|
| Federal seed ($1,000) | Confirmed | Children born after December 31, 2024. Pub. L. 119-21. |
| Annual contribution cap ($5,000) | Confirmed | All contributors combined. No indexing for inflation. |
| Contribution type (after-tax) | Confirmed | Not deductible on federal return. |
| Investment restriction (U.S. index funds) | Confirmed | No individual stocks, bonds, or international funds. |
| Minimum distribution age (18) | Confirmed | Statutory floor. No distributions before age 18. |
| Sunset date | Confirmed | Provision expires December 31, 2028 absent extension. |
| Seed eligibility conditions | Provisional | Income limits, citizenship requirements, and claiming process subject to IRS guidance. |
| Distribution tax treatment | Provisional | Tax-free vs. ordinary income not yet finalized in IRS rules. |
| Qualified distribution categories | Provisional | Education, first home, business defined in statute but implementation details pending. |
| Rules for unused balances after age 18 | Provisional | No published IRS guidance as of April 2026. |
| Excess contribution penalties | Provisional | Penalty structure subject to IRS implementation guidance. |
Who Benefits Most
Likely gets meaningful benefit
- Parents of newborns born after December 31, 2024. Eligible for the $1,000 federal seed plus the full 18-year compounding window. No action required to start the clock other than opening the account and claiming the seed.
- Families who can contribute $5,000 per year consistently. Full compounding effect over 18 years. At a 7% assumed annual return, $5,000 per year plus the $1,000 seed projects to approximately $173,000 at age 18.
- Moderate-income families with no existing child investment account. Low-cost U.S. index fund growth with tax-deferred treatment and no minimum to start beyond the federal seed.
Gets little or no benefit
- Children born before January 1, 2025. No federal seed. Shorter accumulation window. Eligibility rules for pre-2025 children are still pending IRS guidance.
- Families who need a current-year tax deduction. Contributions are after-tax and not deductible. No current-year income tax reduction from contributing.
- Families maximizing a 529 with a state income tax deduction. A 529 may offer better after-tax value for education-specific goals in many states until Trump Account distribution tax treatment is confirmed. Both accounts can be held simultaneously.
For families contributing the maximum $5,000 per year starting at a child's birth, total out-of-pocket contributions over 18 years are $90,000. At a 7% assumed annual return, the projected account value at age 18 is approximately $160,000 including the $1,000 federal seed. The difference between the $90,000 contributed and the $160,000 projected balance reflects compounded investment growth. The tax benefit, if any, is in the distribution treatment, which is not yet finalized in IRS guidance. Families should plan with that uncertainty in mind.
Real-World Scenario
The Okafor family, married filing jointly, child born February 2025: Their daughter Amara was born on February 8, 2025. She qualifies for the $1,000 federal seed. Her parents open a Trump Account in April 2025 and contribute $5,000 before the December 31 deadline. They plan to contribute $5,000 every year through her 17th year.
Total contributions over 18 years: $1,000 (seed) + $90,000 (18 years at $5,000) = $91,000. At a 7% assumed annual return, the projected account value at age 18 is approximately $173,000. The Okafors pay no federal income tax on these contributions in the year made because contributions are after-tax. The tax treatment at distribution depends on IRS guidance still being developed as of March 2026.
The Okafors also claim a Child Tax Credit of $2,500 for Amara on their TY 2025 return. The CTC is a current-year credit separate from the Trump Account. Contributing to the Trump Account does not reduce or affect the CTC. The two OBBBA benefits apply independently.
When a Trump Account Does Not Apply
- Child born before January 1, 2025: Children born before the statutory effective date are not eligible for the $1,000 federal seed. An account may still be opened for them, but the seed is unavailable and the eligibility conditions for the account itself remain subject to IRS guidance.
- Annual contributions exceeding $5,000: The $5,000 annual cap applies to all contributors combined. If grandparents contribute $3,000 and parents contribute $3,000 in the same year, the $1,000 excess is not allowed. No mechanism exists yet for returning or recharacterizing excess contributions pending IRS guidance.
- Non-U.S. equity index funds: Accounts invested in international funds, bonds, individual stocks, or actively managed funds do not satisfy the investment restriction. The entire account must remain in qualifying U.S. equity index funds.
- Distributions before age 18: Distributions are not available before the child turns 18. Early distributions, if permitted at all under future guidance, would likely be subject to penalty. Families with liquidity needs should not rely on Trump Account funds as a short-term asset.
- No current-year tax benefit: Families expecting a tax deduction or credit from Trump Account contributions in the year of contribution are mistaken. Contributions are after-tax. The account does not appear on Schedule 1-A or Schedule A for the contribution year. There is no current-year refund impact.
- Trump Account contributions do not reduce current-year income tax liability. There is no Schedule 1-A line, no Schedule A line, and no above-the-line deduction available for Trump Account contributions. The contribution is not tax-reducing in the year it is made.
- Trump Account contributions do not affect your federal refund. Contributing $5,000 to a child's account in 2025 has zero effect on the TY 2025 refund or balance due. Refund planning should use the OBBBA deductions that do affect current-year liability: SALT, tips deduction, overtime deduction, and auto loan interest deduction.
- FICA taxes are not connected to Trump Account rules. Social Security and Medicare taxes are payroll-based obligations. Trump Account contributions and distributions have no effect on FICA obligations for any person.
- Trump Account contributions do not affect Child Tax Credit eligibility. The Child Tax Credit for a qualifying child is calculated independently of any Trump Account activity for the same child. The CTC is not reduced or altered by opening or contributing to a Trump Account.
Frequently Asked Questions
Related OBBBA Tools and Guides
Next Step
To project how much a Trump Account could be worth when your child turns 18, use the Trump Account Calculator. Enter your child's birth year, whether they qualify for the $1,000 federal seed, your planned annual contribution amount (up to $5,000), and an assumed annual return rate. The calculator shows projected total account value, seed contribution value, and year-by-year contribution totals.
If you are also planning for current-year OBBBA deductions, note that Trump Account contributions do not affect your Schedule 1-A or your current-year refund. For SALT deductions, tips deductions, and overtime deductions, those are separate above-the-line deductions with their own calculators. Use the SALT Deduction Calculator to estimate your incremental benefit from the $10,000 to $40,000 SALT cap increase for TY 2025–2029.
Parents of children born after December 31, 2024 should also review the Child Tax Credit OBBBA Guide. The OBBBA increased the CTC from $2,000 to $2,200 per qualifying child for TY 2025–2028. The CTC is a current-year income tax credit that applies to the same newborns who may also qualify for a Trump Account. The two benefits are independent: claiming the CTC does not affect the Trump Account, and contributing to a Trump Account does not reduce or alter the CTC. Use the Child Tax Credit Calculator to estimate your CTC and refundable ACTC for tax year 2025.
Trump Accounts are one of six provisions in the One Big Beautiful Bill Act. For a complete picture of all OBBBA benefits that may apply to your family — including above-the-line deductions, SALT changes, and the CTC — see the OBBBA Tax Changes Guide.