If Your Child Was Born in 2025 or Later, the One Big Beautiful Bill Has a New Savings Benefit for You

By Bram Berkowitz – Mar 17, 2026 at 8:15AM ESTKey PointsOne provision in the One Big Beautiful Bill Act is the creation of Trump Accounts.Trump Accounts are tax-advantaged savings accounts for children under 18.Parents with newborn children between the start of 2025 and the end of 2028 can also qualify for a special bonus.With the cost of living sky-high, Americans are having a difficult time covering their annual expenses and saving enough for retirement. To make matters worse, Americans may need to save more than ever to live comfortably in retirement, as life expectancy increases. That's why the earlier you can start saving, the better.

President Donald Trump's signature legislation, the One Big Beautiful Bill, which Congress passed last year, largely focused on making temporary tax cuts from Trump's first term permanent and also passing new ones. The bill also included a provision that helps parents start saving for their children as soon as they are born. The new Trump Accounts Trump Accounts are a new way for children under 18 to start saving for retirement. They are essentially like an individual retirement account (IRA), although the funds are managed by an adult, typically a parent or guardian, until the child turns 18. The goal is to capitalize on the power of savings and compounding by giving children as much time as possible to accumulate wealth for retirement.

Official White House Photo by Joyce N. Boghosian. To qualify for a Trump Account, children must be under 18 years old on Dec. 31 of the year a parent or guardian opens the account. They must be U.S. citizens, and each child can have only one account. Children born between Jan. 1, 2025, and Dec. 31, 2028, will receive a $1,000 government contribution to the account. Custodians of the accounts will be able to invest $5,000 per year per child in both 2026 and 2027, and then limits will increase based on inflation starting in 2028. The contributions do not include the $1,000 from the government. Contributions are made on an after-tax basis, meaning they can't be deducted from one's taxable income. However, all growth will be taxed as ordinary income when withdrawals are made. Employers will also be able to contribute $2,500 to Trump Accounts per year per employee. Trump Accounts must be invested in funds tracking a qualified U.S. stock index that is not leveraged and whose expenses are 0.1% or less. Once a child turns 18, the accounts are governed by IRA rules, at least for distributions, meaning withdrawals taken before age 59 1/2 are subject to a 10% early withdrawal penalty. Regular distributions will be taxed like ordinary income. Should you take advantage of Trump accounts? For parents with children born between the start of 2025 and the end of 2028, opening a Trump Account and claiming the $1,000 government contribution makes all the sense in the world, as it's essentially free money. While investing only in U.S. stocks or assets may not always be the best approach, depending on the environment, the long-term nature of these accounts and the historical returns of U.S. stocks bode well for future returns. Additionally, if you're a more risk-averse investor and want to avoid the market-weighted S&P 500 index, there are plenty of safer alternatives, such as the equal-weighted S&P 500 index. Now, parents should still understand that there are other alternatives for building savings for their children that may make more sense in certain scenarios. For instance, if you're planning to save funds for your child's college account, a 529 college savings plan probably makes more sense. The funds must be used for qualifying education expenses, but growth and qualified withdrawals are tax-free. There are also other savings accounts parents can explore for children under 18, such as a custodial Roth IRA or a UGMA/UTMA custodial brokerage account. Ultimately, Trump Accounts are a good idea and offer several advantages that will help build savings for your child, so parents and guardians should explore the option and weigh the pros and cons against the other alternatives mentioned above. The big underlying takeaway here is that one can never start saving early enough. Given how expensive the world is, parents and guardians should let the power of time and compounding work its magic as early as possible.Read NextMar 17, 2026 •By Matthew BenjaminIs the $1,000 Government Seed Money for Trump Accounts Worth Claiming?Mar 17, 2026 •By Dana George5 Medicare Myths That Are Costing Seniors Thousands Every YearMar 17, 2026 •By Maurie BackmanThe Average 401(k) Balance Today May Surprise YouMar 17, 2026 •By Matt Frankel, CFPThe Hidden Retirement Killer Nobody Budgets ForMar 17, 2026 •By Matthew BenjaminWas Your Child Born Since January 2025?

Here Is How to Claim a Trump Account Benefit.Mar 17, 2026 •By Maurie Backman3 Social Security Mistakes Married Couples Should AvoidAbout the AuthorBram Berkowitz is a contributing Motley Fool stock market analyst covering financials, technology, consumer goods, and macroeconomic trends.

Before The Motley Fool, Bram worked in equity research covering bank stocks and as a reporter for local publications. He holds FINRA Series 7 and 66 licenses, as well as a bachelor’s degree in business with a minor in economics from Syracuse University.TMFBramX@BramBerko