President Donald Trump this week unveiled the ambitious—and potentially lucrative—”Trump Accounts,” a proposal within the One Big Beautiful Bill. It was sponsored by the president and passed by the House of Representatives in June 2025.
The initiative proposes a savings and investment mechanism for American babies. It is currently under review by the Senate, but with both chambers controlled by Republicans, its passage is highly likely.
The measure would create investment accounts for children born between January 1, 2025, and December 31, 2028. An initial contribution of US$1,000 would be automatically deposited upon birth registration. Financial institutions would manage these accounts under parental control.
$1,000 accounts for American babies, tax-free and grow over time
These accounts would be tax-exempt in their initial phase. The funds would be invested in a stock index to increase their value. Parents or guardians could make voluntary additional contributions. These contributions would be limited to US$5,000 annually, tax-free until the age of majority.
At age 18, the beneficiary accesses 50% of the balance for qualified purposes. These include higher education, training, initial home purchase, or entrepreneurship. Withdrawals at this stage are taxed as capital gains. Access is subject to specific program rules.
Full, unrestricted withdrawals are available upon reaching age 30. Any unused amount will be liquidated and taxed. Unauthorized withdrawals before the established ages face penalties. These penalties consist of an additional 10% and are taxed as ordinary income.
How $1,000 can turn to $574,000 over time
The Milken Institute has projected the potential returns on the accounts. According to their estimates, the initial $1,000 could grow significantly. Over a 60-year period, it would reach approximately $574,000. This growth depends on the performance of the stock market.
The estimated annual cost exceeds US$3 billion. This figure is based on approximately 3.6 million births per year in the U.S. There are no definitive official budget figures published. Some independent estimates suggest that the cost exceeds US$3 billion annually.
Let’s make a quick summary of what we know so far of the Trump Accounts
- The program’s coverage is limited in duration. It only applies to babies born between January 1, 2025, and December 31, 2028. The active account-opening phase is expected to end in January 2029, coinciding with the end of the current presidential term.
- The bill has already been approved by the House of Representatives. It is currently under review in the United States Senate. There is a political intention to achieve final approval before July 4, 2025. The legislative process continues as usual.
- Additional voluntary contributions from parents, relatives, or legal guardians are permitted. These can total up to US$5,000 per year per account. These contributions enjoy tax benefits during the accumulation period. They can be made until the child reaches 18 years of age.
- The authorized uses for early withdrawals are specific: education, job training, first home, or starting a business. Withdrawals outside these parameters before age 30 are explicitly penalized. They carry a 10% penalty and are taxed as ordinary income.
Trump Accounts eligibility requirements and application process
Eligibility requires that the baby be born in the United States. It is essential that the newborn obtain a Social Security number (SSN). The baby’s citizenship or immigration status is a fundamental requirement. Only those with an SSN will be eligible for the benefit.
At least one parent must have a valid Social Security number. Additionally, that parent must be legally authorized to work in the U.S. These requirements are intended to ensure the beneficiary’s ties to the country. Verification will be the responsibility of the authorities.
Enrollment in the program is completely automatic. No additional or separate application is required. The system is activated upon official birth registration with the state authority. The federal government would coordinate with the states to open and fund the accounts.
