The One Big Beautiful Bill Act, enacted on July 4, 2025, introduced a new type of tax-advantaged savings account known as a Trump Account. These accounts are designed to help families save for a child’s future expenses, including education, housing, and certain life events.
Below is an overview of how Trump Accounts work, who is eligible, and how accounts are established.
Eligibility and Initial Government Contribution
For children born between 2025 and 2028, a parent or legal guardian may elect to have the federal government contribute an initial $1,000 to a Trump Account. This contribution is referred to as the pilot program contribution and is made during the first year the account is established.
For eligible children under age 18 who were born before 2025, parents or guardians may voluntarily open a Trump Account beginning July 4, 2026; however, these children are not eligible for the $1,000 pilot contribution.
Key Features of Trump Accounts
Additional details regarding Trump Accounts include the following:
- Accounts may be established beginning after July 4, 2026
- The child must be a U.S. citizen and have a valid Social Security Number
- A parent or guardian may contribute up to $5,000 per year beginning July 4, 2026
- Parent or guardian contributions are not deductible
- A parent’s or child’s employer may contribute up to $2,500 per year
- Employer contributions are pre-tax
- Employer contributions count toward the $5,000 annual contribution limit
- Distributions from the account may not begin until the year the child reaches age 18
- Funds may only be invested in eligible investments, which include:
- Mutual funds, or
- Exchange-traded funds (ETFs) that track an index of primarily U.S. companies
Qualified Uses of Trump Account Distributions
Distributions must be used for qualified expenses. If funds are used for non-qualified purposes, a 10% penalty will apply.
Qualified uses include:
- Higher education expenses
- Certain credentialing expenses
- First-time homebuyer expenses (up to $10,000)
- Birth or adoption expenses for a first child (up to $5,000)
Treatment After Age 18
Once the child reaches age 18, the Trump Account follows IRA account rules. As a result, the individual must have earned compensation in order to make contributions to the account after turning 18.
Initial Account Setup Through the 2025 Tax Return
Parents or guardians of eligible children may establish a Trump Account through their 2025 federal income tax return by filing Form 4547, Trump Account Election(s).
Form 4547 allows taxpayers to elect the following:
- Have the U.S. Treasury establish a Trump Account in mid-2026 for any eligible child
- Request the initial $1,000 pilot contribution for children born in 2025
- If Form 4547 is not filed, the parent or guardian may still establish the account independently after July 4, 2026
For taxpayers who file Form 4547 with their 2025 return, the Trump Account will be established during the summer of 2026, and the initial $1,000 contribution will be deposited at that time for eligible children.
Additional Resources
For more detailed information, refer to the following resources:
- Draft of Form 4547 and Draft Form 4547 Instructions
- Trump Accounts Website
- IRS News Release IR-2025-117
(Treasury and IRS guidance on Trump Accounts established under the Working Families Tax Cuts, including notice of upcoming regulations)
