House Approves Tax Bill Featuring $1,000 ‘Trump Accounts’ for Children

House lawmakers on Thursday passed President Donald Trump’s new tax bill, which includes a provision to create federally funded savings accounts for children, dubbed “Trump Accounts.”

The measure would provide a $1,000 deposit from the U.S. Treasury into each account for children born between January 1, 2025, and January 1, 2029. The funds can later be used for education, a first home purchase, or to start a small business. The accounts, previously labeled “MAGA Accounts,” are intended to encourage long-term wealth building through compound growth.

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Parents will be allowed to contribute up to $5,000 annually to the accounts, which will be invested in diversified stock index funds. Earnings grow tax-deferred, and qualified withdrawals will be taxed at the long-term capital gains rate.

Sen. Ted Cruz (R-Texas), who led the initiative, said the accounts offer “the miracle of compound growth, the ability to accumulate wealth, which is transformational.”

The Trump Accounts are comparable to existing custodial and 529 college savings plans, though with different tax advantages and usage flexibility. While 529 accounts offer tax-free withdrawals for education-related expenses, the Trump Accounts provide broader usage options, though withdrawals are subject to capital gains tax.

Eligibility requires the child to be a U.S. citizen with parents who have valid Social Security numbers. There are no income restrictions.

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Financial advisor Winnie Sun recommended that families prioritize 529 plans for education savings due to their tax-free growth and expanded flexibility, but noted that Trump Accounts could complement other savings tools. The bill now awaits Senate consideration.