The United States began opening "Trump accounts" for children on July 4, launching a new type of tax-advantaged investment account that the government will seed with $1,000 for eligible newborns. The program was timed to the country's 250th anniversary and framed by the administration as a way to give children an early stake in the economy.
How the accounts work
Created under the law the government calls the Working Families Tax Cuts, Trump accounts are investment accounts held in a child's name, with the money placed in low-cost US stock-index funds. Under guidance issued by the Treasury Department and the Internal Revenue Service, children born between January 1, 2025, and December 31, 2028, who are US citizens with a Social Security number, qualify for a one-time $1,000 federal contribution, deposited no earlier than July 4, 2026.
Any child under 18 with a Social Security number can have an account opened for them. Families can add up to $5,000 a year, and employers can contribute up to $2,500 per worker within that annual limit. The funds grow tax-deferred and generally cannot be withdrawn before the child turns 18. Parents open an account and enroll in the pilot using IRS Form 4547.
The IRS said that about 4 million children had been signed up by mid-2026, with roughly 1 million having claimed the $1,000 pilot contribution.
The case for the accounts
Supporters, including the administration and major financial firms that have built platforms to hold the accounts, argue that starting early lets compound growth do the heavy lifting. The Treasury Department has promoted projections suggesting the initial $1,000 could grow to hundreds of thousands of dollars by retirement under long-run historical market returns.
Advocates also note that, unlike an ordinary individual retirement account, a Trump account does not require the child to have earned income, so saving can begin at birth. Backers frame the accounts as a tool for financial literacy and for building wealth across generations regardless of a family's starting point.
The criticism
Critics counter that the structure favors families who already have money. Every eligible child receives the same $1,000, but only households with spare income can add the full $5,000 a year, so the accounts of wealthier children are likely to grow far faster. The Center for Economic and Policy Research argued that the program will tend to widen wealth gaps rather than close them.
Some analysts favor alternatives such as "baby bonds," which scale government contributions to family wealth, directing more to lower-income children. Skeptics also note that awareness of the accounts, and the ability to contribute to them, is likely lowest in exactly the households that could benefit most.
For now, the accounts are live, and the debate over whether they broaden ownership or entrench advantage will play out over the years, and decades, that the money is meant to sit and grow.
