A new federal savings account for children, created by the One Big Beautiful Bill Act (OBBBA) of July 2025 and known as a Trump Account, opened for deposits on 4 July 2026. Eligible children born between 2025 and 2028 receive a $1,000 deposit from the federal government; families can add up to $5,000 a year on top, invested in low-cost US stock index funds; and the money is held until the child turns 18. This guide explains who qualifies, how the money is invested, how to open an account, and a new IRS rule that lets grandparents and other relatives contribute without extra gift-tax paperwork.
The short version
- $1,000 government seed deposit for a child who is a US citizen, has a Social Security number, and was born between 1 January 2025 and 31 December 2028.
- Families can contribute up to $5,000 per child per year (parents, relatives, and employers), on top of the government deposit.
- The money is invested in low-cost US equity index funds, with fund fees capped at 0.10% a year.
- The account grows tax-deferred and is built for the long term: it converts into a traditional IRA when the child reaches adulthood, at which point normal IRA rules apply (which allow some penalty-free early withdrawals, for example toward a first home or higher education).
- You open or claim an account using Form 4547 with a 2025 federal tax return, or directly at TrumpAccounts.gov; a companion app is run with Robinhood.
- A new IRS safe harbor (Revenue Procedure 2026-25, 29 June 2026) means most family contributions do not trigger gift-tax reporting, provided they stay within the annual gift-tax exclusion ($19,000 per person for 2026).
What a Trump Account is
A Trump Account is a tax-advantaged, long-term investment account opened in a child’s name (the law creates them as new “530A” accounts). It was created by OBBBA in 2025 and opened for funding on 4 July 2026, timed to the 250th anniversary of the Declaration of Independence. In the days after launch the Treasury reported that more than 6 million accounts had been opened for children under 18, with about 1.4 million newborns eligible for the $1,000 pilot deposit (up from the 4 million accounts and 1 million pilot-eligible the IRS had reported on 31 March 2026). In structure it is closer to a retirement account than to an instant-access savings pot: contributions are made with after-tax money, the balance is invested in low-cost US stock index funds and grows tax-deferred, and the account is designed to convert into a traditional IRA when the child reaches adulthood.
The headline feature is the government’s $1,000 deposit for eligible newborns and young children. That deposit is automatic in the sense that it is available to be claimed for every qualifying child, but it does have to be claimed. The rest of the account works like a simple, low-cost investment plan that family members, and in some cases employers, can pay into within an annual limit.
Who qualifies for the $1,000 deposit
To receive the $1,000 federal deposit, a child must:
- Be a US citizen at birth;
- Have a Social Security number; and
- Be born between 1 January 2025 and 31 December 2028.
The 2025 to 2028 birth window is the eligibility band for the automatic $1,000 deposit. A smaller $250 seed is available for some children born between 2016 and 2024 who live in a ZIP code with median income of $150,000 or less (which covers most of the country). Children outside these bands can still have a Trump Account opened and funded by their families, but the government seed is tied to those birth ranges. If you have a child who qualifies for the $1,000, it is worth claiming even if you do not plan to add anything yourself, because it is money the account starts with at no cost to you.
How the money is contributed and invested
On top of the government deposit, the account can receive up to $5,000 per child per year, up to the year before the child turns 18. That $5,000 is a combined annual limit across everyone who pays in: parents, grandparents, other relatives, and in some cases the child’s parent’s employer. Contributions are made with after-tax dollars (there is no upfront federal income tax deduction for paying in).
The money is invested in low-cost US stock index funds and grows tax-deferred, and the rules cap the fund fee at 0.10% a year. At launch, the exclusive default investment is the State Street SPDR Portfolio S&P 500 ETF (ticker SPYM), which tracks the S&P 500 and charges just 0.02% a year, with a small number of other low-cost index funds available as selectable alternatives, including the iShares Core S&P 500 ETF (IVV) and the Vanguard Total Stock Market ETF (VTI). That fee cap matters more than it looks: over 18 years, the difference between a 0.02% fund and a 0.60% fund on the same contributions can run to a meaningful share of the final balance, so building the cap into the product removes one of the more common ways small accounts quietly lose value to charges.
Because the balance is invested in the stock market, it can fall as well as rise, particularly over shorter periods. The long holding period (up to 18 years) is what makes an all-equity index approach reasonable here, but a family adding money should understand that the value is not guaranteed and will move with the market.
The gift-tax safe harbor: what it means for grandparents and relatives
Why this matters. Large gifts can, in principle, require the giver to file a federal gift-tax return (Form 709). A new IRS safe harbor removes that worry for ordinary Trump Account contributions, so a relative can pay in without extra paperwork, as long as their total gifts to that child stay within the annual exclusion.
On 29 June 2026, the Treasury and IRS issued Revenue Procedure 2026-25 (announcement IR-2026-80), creating a gift-tax reporting safe harbor for contributions to Trump Accounts. In plain terms: where the requirements are met, contributions made by an individual donor to a child’s Trump Account in a year will not be subject to gift-tax reporting for that year. The safe harbor is aimed squarely at the practical question a grandparent or other relative will ask, which is whether paying into the account creates a tax filing for them.
The safe harbor is built around staying within the annual gift-tax exclusion, which for 2026 is $19,000 per person, per recipient. A contribution comfortably inside that limit, made by an individual and meeting the other conditions in the Revenue Procedure, does not require a gift-tax return. Because the Trump Account’s own annual contribution cap ($5,000 per child) is well below the $19,000 exclusion, most family contributions will fall inside the safe harbor without any special planning. The full conditions are set out in Revenue Procedure 2026-25; anyone giving at or near the annual exclusion, or combining a Trump Account gift with other gifts to the same child, should read them or check with a tax professional.
How to open or claim an account
- Through your tax return. You can claim or open the account using Form 4547 filed with a 2025 federal tax return.
- Online. Accounts can be opened and managed directly at TrumpAccounts.gov, the official government site for the program.
- Through the app. A companion app, built with Robinhood, lets families set up and manage the account and its contributions. Robinhood and the Bank of New York (BNY) were selected by the Treasury to hold and administer Trump Accounts in the program’s initial phase.
- At the hospital, for newborns. The Social Security Administration will let parents enroll a newborn in a Trump Account at the same time they apply for the baby’s Social Security number, through its Enumeration at Birth program; hospital forms and future parent mailings are being updated to include the option.
- Employer and corporate contributions. A number of large employers and companies have pledged to contribute to or match Trump Account deposits for employees’ children. If you are employed, it is worth asking whether your employer offers this.
How a Trump Account compares with a 529 or a custodial account
Trump Accounts are not the only tax-advantaged way to save for a child, and they are not a replacement for the existing options. Families already using a 529 plan or a custodial account (UGMA or UTMA) will want to understand where the new account fits.
- Versus a 529 plan. A 529 is built for education and offers tax-free growth when used for qualifying education costs, with much higher contribution room than the Trump Account’s $5,000. A Trump Account is a long-term, IRA-style vehicle (it converts to a traditional IRA in adulthood) with a lower annual limit. The two can be used together: our guides to the 529 to Roth IRA rollover and the 529 to Roth 15-year rule cover how 529 money can be repurposed if it is not needed for school.
- Versus a custodial (UGMA/UTMA) account. A custodial account has no contribution cap and no restriction on use, but it becomes the child’s outright property at the age of majority and has less favorable tax treatment on investment income. The Trump Account trades that flexibility for a government seed deposit, a fee cap, and the gift-tax safe harbor.
- The $1,000 is the clear win. Whatever else a family does, the government’s $1,000 deposit for an eligible child is free money the account starts with. That alone is a reason to claim the account for a qualifying child.
Trump Accounts were created by the same 2025 law that changed the SALT cap and 529 rules; our OBBBA 2026 guide covers those other provisions for the current tax year.
Common questions
- Does my child automatically get the $1,000? The deposit is available for every qualifying child (US citizen, Social Security number, born 2025 to 2028), but it does need to be claimed, through a 2025 tax return using Form 4547 or at TrumpAccounts.gov.
- How much can I add each year? Up to $5,000 per child per year in total across all contributors, on top of the government deposit.
- Will I owe gift tax for paying in? Under the June 2026 IRS safe harbor, an individual’s contributions do not trigger gift-tax reporting as long as their total gifts to that child stay within the annual exclusion ($19,000 for 2026) and the other conditions are met. Because the account’s own $5,000 cap is well below $19,000, most family contributions are covered.
- When can the money be used, and for what? The account is built for the long term. It grows tax-deferred and converts into a traditional IRA when the child reaches adulthood, after which normal IRA rules apply: the money is intended mainly for retirement, though IRA rules do allow some penalty-free early withdrawals, for example up to a set limit toward a first home or for qualified higher education. Confirm the current rules and the tax treatment on withdrawal against IRS guidance before withdrawing.
- Is the money guaranteed? No. It is invested in stock index funds, so the value moves with the market and can fall as well as rise. The long time horizon is what supports an equity approach, but there is no guaranteed return.
- Should I use this instead of a 529? They do different jobs and can be used together. A 529 has far higher limits and tax-free education growth; a Trump Account adds the $1,000 seed and broader permitted uses at a lower annual cap. The right mix depends on your goals and budget.
Sources
- IRS – Safe harbor for certain contributions to Trump Accounts (Rev. Proc. 2026-25, IR-2026-80, 29 June 2026) (primary)
- IRS – Working Families Tax Cuts (OBBBA) newsroom (primary)
- US Treasury: Trump Accounts investment lineup (default State Street SPYM; iShares IVV and Vanguard VTI among selectable funds; Robinhood and the Bank of New York as initial administrators), press release sb0551 (July 2026).
- Social Security Administration: newborn enrollment via the Enumeration at Birth program (announced July 2026).
- Official program site: TrumpAccounts.gov
- Savvy Investor Guide: OBBBA 2026: SALT and 529 changes, 529 to Roth IRA 15-Year Rule, Roth vs Traditional IRA.
This article is for general information only and is not personalised tax or financial advice. Trump Account rules, contribution limits, and the details of the gift-tax safe harbor depend on your circumstances and on IRS guidance that may be updated; consult a qualified US tax professional (CPA or EA) before relying on them for your own situation. Investments held in these accounts can fall as well as rise in value. Figures reflect the program as launched on 4 July 2026 under OBBBA. Fact-checked 7 July 2026.