Get started early with long-term investing.
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The One Big Beautiful Bill Act (OBBBA) includes a provision creating 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 eligible children born from 2025 through 2028 receiving a one-time $1,000 federal deposit.
Children ages 10 and under born before 2025 may still receive a $250 contribution through a pledge from the Michael & Susan Dell Foundation. Trump accounts are automatically established for children under age 18 with a valid Social Security number, but parents or legal guardians must claim and activate them.
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.
- Eligible children born from 2025 through 2028 can receive a one-time $1,000 federal deposit.
- Children under 10 born before 2025 may qualify for a $250 charitable contribution from the Michael & Susan Dell Foundation.
Trump accounts are tax-advantaged investment accounts established under the OBBBA. The accounts became available in 2026 and are managed by parents or legal guardians until the child turns 18. Funds deposited in the accounts generally 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 The money grows tax deferred and is taxed as ordinary income (meaning itâs taxed like regular wages) when withdrawn. Depending on how the funds are used, a penalty on withdrawals before age 59Âœ may apply.
Whoâs eligible for a Trump account?
Michael & Susan Dell Foundation pledge
Michael and Susan Dell 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 childâs account, including up to $2,500 from an employer. Employer contributions donât count as taxable income to the child and are included in the annual contribution limit.
Proposed Treasury regulations would also allow employees to make pre-tax contributions to their dependent childrenâs Trump accounts directly from their paychecks.
Charitable organizations and government entities may also contribute additional amounts, as long as those contributions are offered broadlyâfor 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 generally are invested in a diversified U.S. stock index fund. Under Treasury Department rules issued in 2026, certain donors can also contribute shares of individual companies without requiring those shares to be sold and reinvested in index funds. Investment growth is tax deferred. Although the accounts share some tax features with traditional individual retirement accounts (IRAs), Trump accounts 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 59œ 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 childâs financial goals.
- Seed funding. Some participants may be eligible for a one-time federal or charitable contributionâup to $1,000âto jump-start savings.
Cons
- Restricted investment choices. Although certain donors can contribute shares of individual companies, families generally must invest in U.S. stock index funds, leaving little room to customize investments to suit their risk tolerance.
- Limited penalty-free uses. Before age 59Âœ, withdrawals face a penalty unless theyâre 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.
- Rules and guidance may evolve. Given the newness of the program, guidance from the Treasury Department and administrative procedures may continue to develop over time.
The bottom line
Trump accounts offer a new way to invest for a childâs future, with tax-deferred growth and a few specific penalty-free uses. Depending on eligibility, 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.
This article was most recently revised and updated by David ScheppThis article was most recently revised and updated by Nancy Ashburn
