The U.S. House of Representatives has adjourned for the month of August, and members are back in their districts, flaunting the wins they’ve brought home since they gaveled in last January. Most significantly, members are focused on how the One Big Beautiful Bill Act (H.R. 1) serves their constituents. Among the provisions in the bill, you may be hearing about the new so-called “Trump Accounts.” But what are these accounts, and how do they practically affect American families?
From defunding big abortion businesses to expanding school choice, President Trump’s administration was dedicated to delivering the most pro-family budget this country has seen. And they got creative. There is no greater investment for a country’s future than its children, and the President knows that. That’s why the final version of the bill, signed into law on July 4, birthed the Trump Accounts.
The Trump Accounts are a tax-deferred investment account created for a child with a one-time federal contribution of $1,000 when they are born. The money will be invested in low-cost stock funds that track the market index. Families can contribute an additional $5,000/year combined (eventually adjusted to inflation), including a $2,500 potential contribution from employers. This does not count towards the employee’s gross income, and it is not subject to taxes.
The accounts will automatically open for every child born with a Social Security number between 2025 and 2028, regardless of the parents’ income. Children born before 2025 are eligible to open accounts and begin investing in their future but will not receive the $1,000 federal seed money.
Once the child turns 18, they can withdraw these funds to invest in further education, workforce training, starting a business, or purchasing a home. The account then functions similarly to an Individual Retirement Account (IRA), and other withdrawals before age 59½ are subject to regular income tax and a 10% penalty.
Michael Dell, CEO of Dell, says this is a “simple yet powerful way to transform lives.” He continued, “Decades of research has shown that giving children a financial head start profoundly impacts their long-term success.” These accounts promote financial literacy and personal investment and offer a path to long-term stability.
Zach Buchwald, CEO of Russell Investments, is also among dozens of other financial professionals who support this initiative. He explained in a scenario:
Families contribute $20 weekly to their child’s account, and employers add another $2,500 annually. At a 7 percent rate of return, this account could exceed $100,000 by age 21. And with continued contributions, the account could grow to over $2,000,000 by age 60.
“Most Americans don’t save or invest nearly enough during their working years,” he says. The Trump Accounts “can help Americans build financial security earlier and more confidently.” Buchwald also notes that this type of program can reduce government spending in the long run by promoting independence, rather than handcuffing individuals to long-term programs like Medicaid.
Ultimately, these accounts represent more than just another method to achieve fiscal responsibility; they are an intentional investment in every child’s future, regardless of their background. As these accounts grow, they empower young adults to pursue education, entrepreneurship, or homeownership, ultimately contributing to a more prosperous society.
As members of Congress return home for recess, they will likely spotlight the Trump Accounts as a powerful tool that serves families everywhere.
