federal tax legislation tax planning Feb 05, 2026

Trump Accounts Explained: Tax-Advantaged Savings for Children Under 18 (Starting 2026)

By Clinton Donnelly, CEO, Founder | CryptoTaxAudit

Trump accounts are tax-advantaged savings accounts for children, created under OBBBA and available starting in 2026.

How Trump Accounts work:

Feature	Rule / Detail
Who is it for?	Children under age 18 (must have SSN)
Contribution limit	$5,000/year (family) + $2,500/year (employer)
Tax break	Grows tax-free; no deduction for contributions
Free gov't money	$1,000 "Baby Bonus" for babies born 2025–2028
Withdrawals	Locked until age 18; penalty-free for college/first home
Start date	Accounts available beginning 2026

President Trump signed the One Big, Beautiful Bill Act (OBBBA) into law on July 4, 2025, establishing these accounts as IRAs designed specifically for children.

Guide Sections

Part 1: Government Contribution & Baby Bonus
Part 2: Who Can Open a Trump Account?
Part 3: How Contributions Work
Part 4: When and How to Withdraw
Part 5: Should You Open an Account?

Trump Account Government Contribution: Free $1,000 for Eligible Babies (2025-2028)

The government seeds qualifying accounts with $1,000 at no cost to you. That’s incredible. Also, companies offering Trump account financial accounts are now offering their own $1000 gift to win your business. Even if you don't plan to add your own money, claim this contribution for any eligible child.

Pilot program eligibility:

Requirement	Details
Birth years	2025–2028
Citizenship	U.S. citizen

Who Can Open a Trump Account?

You can open a Trump account for any child who meets two requirements:

Requirement	Details
Age	Under 18 at year-end
Documentation	Social Security number required

Key timing: If your child turns 18 during the year, you must open the account before January 1 of that year. After age 18, traditional IRA rules apply instead.

How Trump Account Contributions Work

Contributions to your child's Trump account begin in 2026. You won't receive a tax deduction for these contributions while your child is under 18 (though this may change once they reach 18). The account grows tax-free during the minor years.

Contribution limits:

Contributor Type	Annual Limit	Inflation Adjustments Begin
Family (combined total)	$5,000	2028
Employer	$2,500	2027

The $5,000 family limit is shared among everyone, parents, grandparents, relatives, and anyone else contributing to the account. If multiple people contribute, their combined total cannot exceed $5,000.

Employer contributions are tax-free for both you and your child. They don't count as income for either of you.

Investment requirements:

Account funds must go into mutual funds or ETFs that track broad U.S. equity indexes (like the S&P 500). Sector-specific or industry-specific funds are not allowed.

Fund fees are capped at 0.1% of your account balance per year.

When and How to Withdraw from Trump Accounts

Withdrawals cannot begin until the year your child turns 18. Once your child reaches 18, the account follows traditional IRA withdrawal rules.

Early withdrawal penalties:

Withdrawal Age	Penalty	Exceptions
Before 59.5	10% penalty may apply	Higher education expenses, first home purchase
After 59.5	No penalty	N/A

Tax treatment of withdrawals:

Source of Funds	Tax Treatment
Your original contributions	Tax-free (return of investment)
Account earnings	Taxable income to your child
Employer contributions	Taxable income to your child

When your child makes a withdrawal, the portion coming from your contributions returns tax-free. Any growth in the account or employer-contributed funds count as income in the withdrawal year.

Should You Open a Trump Account for Your Child?

Trump accounts offer tax-free growth and free government money for eligible children. Whether they make sense for your family depends on your financial situation, other savings you have, and your child's age.

If you're weighing Trump accounts against 529 plans, custodial accounts, or other savings strategies, talk to someone who can walk through your specific situation.