HourlyMath

What Is a Trump Account?

Updated July 2026 · 6 minute read

A Trump Account is a new type of investment account for kids, created by the One Big Beautiful Bill Act, signed into law in July 2025. Earlier drafts called it a "MAGA Account," and you may still see that name in older coverage — same program. The pitch is simple: the government seeds an account for eligible children with $1,000, families and employers can add more over time, and the balance grows tax-deferred until the child is an adult. Here's what's actually in it, and what's still genuinely uncertain.

Who's eligible

Any child under 18 with a Social Security number can generally have a Trump Account opened for them. But the headline $1,000 government-funded starter deposit only goes to children born between 2025 and 2028 — that's the specific window written into the law. A child born just outside it can still have an account and receive contributions, just without the automatic seed money. If you have kids on both sides of that line, our seed growth calculator shows exactly what that $1,000 head start is worth on its own.

How much can go in

Families can contribute up to $5,000 a year, a figure indexed for inflation so it should rise over time. Employers can also chip in up to $2,500 a year tax-free on an employee's behalf, and nonprofits or other organizations can contribute within limits too. Importantly, these aren't separate buckets — all contributions from all sources share the same combined annual cap, so a family maxing out their own $5,000 wouldn't also get a full additional $2,500 from an employer on top without exceeding the limit.

Where the money actually goes

Unlike a typical brokerage account or 401(k), there's no menu of funds to pick from. Contributions are invested in a low-cost fund that tracks a broad U.S. stock index — conceptually similar to a plain S&P 500 index fund. That's a deliberate design choice: it keeps fees low and removes the temptation (or the burden) of picking investments for a newborn's account. It also means the balance will move with the stock market, up and down, over the 18-plus years before it's touched.

What happens at 18

The account generally can't be touched until the child turns 18. After that, qualified withdrawals — the law names things like higher education costs, a first home purchase, or starting a small business — are taxed at long-term capital gains rates, which are typically friendlier than ordinary income tax rates. Withdrawals outside those qualified uses face less favorable tax treatment, in the spirit of how early withdrawals work on other retirement-style accounts. Because the account is invested in equities from birth, many people are treating it less like a college fund and more like the first two decades of a retirement account — see our growth calculator for what leaving it untouched even further, to age 65, can look like.

What's still evolving

The broad strokes above come from the bill's text, but a lot of the operational detail — exactly which institutions offer these accounts, the precise mechanics of opening one, and finer points of IRS guidance on qualified withdrawals — is still being clarified by Treasury and the IRS. Treat specifics as directionally correct rather than final, and confirm details with a financial advisor or tax professional before making contribution decisions, especially around the withdrawal tax rules.

Related tools

Once you know the rules, the number that actually matters is what your specific numbers become over 18 years. The growth calculator combines the seed and your contributions into a single projection; the employer match calculator isolates what a workplace contribution is worth; and Trump Account vs. 529 plan compares this to the other major kid's-savings option.