What is a Trump account? Tax-advantaged investment accounts for children
Tucked away inside the One Big Beautiful Bill Act (OBBBA) is a provision to create special tax-advantaged investment accounts for children known as “Trump accounts.” These accounts are meant to give kids an early stake in the stock market, with the federal government providing a one-time $1,000 deposit for children born from 2025 through 2028.
Children ages 10 and under who are born before 2025, and therefore ineligible for the federal $1,000 deposit, may still receive a $250 contribution through a pledge from the Michael & Susan Dell Foundation. But any child under age 18 can have an account, even if they don’t qualify for the federal or charitable funds.
Key Points
- Trump accounts are tax-advantaged investment accounts for children that hold low-cost stock market index funds and are managed by parents until age 18.
- Children born in 2025 through 2028 receive a $1,000 deposit from the federal government.
- Children under 10 born before 2025 may qualify for a $250 private contribution from the Michael & Susan Dell Foundation.
- Enrollment is expected to open in July 2026.
What are Trump accounts?
Trump accounts are tax-advantaged investment accounts established under the OBBBA. Enrollment is expected to open in July 2026, although the exact launch date hasn’t been finalized. Parents and legal guardians manage the accounts until the child turns 18. Funds deposited in the accounts must be invested in a mutual fund or exchange-traded fund (ETF) that tracks a qualified index, such as the S&P 500.
The child gains access to their account at age 18. The money grows tax deferred and is taxed as ordinary income (meaning it’s taxed like regular wages) when withdrawn. Depending on how the funds are used, a penalty on withdrawals before age 59½ may apply.
Who’s eligible for a Trump account?
Michael & Susan Dell Foundation pledge
Michael and Susan Dell have committed $6.25 billion to expand access to Trump accounts. The pledge will provide a $250 deposit for up to 25 million children ages 10 and younger who live in ZIP codes with median household incomes at or below $150,000 and who do not qualify for the federal $1,000 deposit. The foundation may extend the contribution to older children if money is left over.
Any child under age 18 with a valid Social Security number can have a Trump account established for them. But eligibility for the $1,000 federal deposit requires the child to have been born from January 1, 2025, to December 31, 2028. Children 10 and under born before 2025 may qualify for a $250 charitable contribution.
How do contributions work?
Parents, family members, friends, and employers can contribute up to a combined $5,000 a year to each child’s account, including up to $2,500 from an employer. Charitable organizations and government entities may also contribute additional amounts, as long as those contributions are offered broadly—for example, to all children in a state or all children born in a given year.
How do Trump accounts grow?
Funds in a Trump account are invested in a diversified U.S. stock index fund. Investment growth is tax deferred. Although the accounts share some tax features with traditional individual retirement accounts (IRAs), they are not retirement accounts. The money becomes accessible at age 18 and can be used for expenses incurred during early adulthood.
When and how can the money be used?
A child may withdraw funds once they turn 18. Most withdrawals will be subject to income tax, and a 10% penalty may apply to withdrawals made before age 59½ unless the money is used for a qualified purpose, such as:
Pros and cons of Trump accounts
Pros
- Offers children early exposure to long-term investing. The accounts are invested in a diversified stock index fund, which can help young people learn how compound growth works and become more comfortable with saving and investing as adults.
- Allows tax-deferred growth. Investments grow without annual taxes, which can significantly boost long-term returns compared with a taxable brokerage account.
- Creates a structured way for families and others to contribute. Parents, relatives, employers, and even community organizations can add funds annually, offering a coordinated way to support a child’s financial goals.
- Seed funding. Some participants may be eligible for a one-time federal or charitable contribution—up to $1,000—to jump-start savings.
Cons
- Restricted investment choices. Funds must be invested in a U.S. stock index fund, leaving no room for bonds, cash, or customized portfolios that might suit a family’s risk tolerance.
- Limited penalty-free uses. Before age 59½, withdrawals face a penalty unless they’re used for specific purposes such as education, job training, starting a business, or buying a first home.
- Withdrawals are taxed. Unlike 529 college savings plans or Roth IRAs, Trump account withdrawals are taxed as ordinary income, meaning the tax bill could be significant if the account grows substantially.
- Program details and timing remain uncertain. Sign-ups are expected to begin in 2026, but the Treasury Department has not finalized rules or processes, and delays are possible.
The bottom line
Trump accounts offer a new way to invest for a child’s future, with tax-deferred growth and a few specific penalty-free uses. The accounts are expected to open for sign-ups in July 2026, and your child may qualify for a one-time federal or charitable deposit to jump-start savings. As you evaluate this new option, think about how a Trump account would fit alongside other tools you may already use, such as a 529 plan or Roth IRA.
References
- Landmark Dell Gift Supercharges Trump Accounts for America’s Kids | whitehouse.gov