Explained: How the $1,000-per-baby 'Trump accounts' would work
What's the story
On Monday, United States President Donald Trump announced a federal program that will give $1,000 government-funded investment accounts for every American baby born between January 1, 2025, and December 31, 2028. The initiative, called "Trump accounts," will reportedly be part of a massive budget bill, also known as the 'One Big Beautiful Bill Act,' that has already passed the House of Representatives but faces hurdles in the Senate. Here are more details about the plan.
Account details
What are 'Trump accounts?'
The Trump accounts will be tax-deferred investment accounts that track stock market performance. For every US citizen born between January 1, 2025, and December 31, 2028, the federal government will make a one-time contribution of $1,000 into these accounts. Parents or guardians will manage these accounts and can add up to $5,000 in private contributions each year. In order to qualify, the baby must be a US-born citizen and both parents and the child must have Social Security numbers.
Account usage
Details of account restrictions and penalties
The money in the Trump accounts must be invested in a low-cost, diversified US stock index fund or equivalent. No withdrawals can be made until the child turns 18. Distributions for qualified expenses will be treated as capital gains, taxed at a lower rate than ordinary income. However, if used for other expenses by an under-30 beneficiary, they will be taxed as ordinary income and subject to an additional 10% tax.
Trump's statement
CEOs of major companies to contribute to program
Trump described the initiative as "a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation." CEOs from major companies like Dell Technologies, Uber, Goldman Sachs, and Robinhood have reportedly committed to contributing to the program for their employees' children's accounts. They were praised by Trump as "really the greatest business minds we have today" who are "committed to contributing millions of dollars to the Trump account."
Legislative hurdles
Program faces hurdles in Senate
The program passed the House as part of a massive budget bill, but now faces stiffer Senate Republican resistance. The accounts can't be implemented as a standalone program and depend on passage of what Trump calls the "one big, beautiful bill." However, the Congressional Budget Office (CBO) recently found that this bill would add $2.4 trillion to the national debt over the next decade.