What a Trump Account is, rule by rule
A Trump Account is a new kind of savings account for children, created by the One Big Beautiful Bill Act and written into the tax code as Section 530A. It is not a bank account and it is not a college fund. It is closest to a nondeductible traditional IRA that a child is allowed to own before they have a job. Here are the rules as they stand, without any opinion attached to them.
Who can have one. Any child under 18 with a Social Security number, one account per child. The one-time federal contribution. Children born in calendar years 2025 through 2028 who are US citizens with Social Security numbers can have a one-time $1,000 contribution deposited by the Treasury Department, once a parent or guardian makes the election. Deposits began no earlier than July 4, 2026. That $1,000 does not count against the annual contribution cap, and the IRS has said it is not reduced to offset unpaid taxes, child support, or other federal or state debts.
What can go in. Up to $5,000 a year per child from everyone combined: parents, grandparents, friends, and employers. That figure is indexed for inflation after 2027. An employer may contribute up to $2,500 a year per employee under Section 128, and that money is not taxable income to the employee when it goes in, but it sits inside the same $5,000 ceiling rather than on top of it. Contributions from governments and qualifying nonprofits are handled separately and do not count against the cap. Nothing is deductible. Your contributions are made with after-tax dollars and there is no federal deduction or credit for making them.
What it may be invested in. The law is unusually specific here: money in the growth period must sit in a mutual fund or ETF that tracks a broad index of primarily US equities, with no leverage, and with an annual expense ratio no higher than 0.1%. There is no bond option, no target-date glide path, and no cash. That is why the return field on this page defaults to a stock-market assumption rather than a blended one.
When the money comes out. No withdrawals are permitted during the growth period. On January 1 of the year the beneficiary turns 18, the account stops being a Section 530A account and becomes an ordinary traditional IRA in the child's name. From that day the traditional IRA rulebook applies, including the age 59.5 line.
The formula
Taxable share = Balance − your own contributions
After tax = Balance − (Taxable share × tax rate) − (Taxable share × 10% if no exception applies)
m is your monthly contribution, r the assumed annual return, and t the years from now until the January the child turns 18. The second line is the one most people get wrong: only your own after-tax contributions create basis. The federal $1,000, any employer money, and every dollar of growth are taxable when they come out.
Worked example
A child born in 2026, $200 a month from you, a 7% assumed return, a 22% marginal rate at withdrawal. Over 18 years you put in $43,200. The account reaches $89,656.74: $86,144.21 from your contributions and $3,512.54 grown from the federal $1,000.
Your basis is $43,200, so $46,456.74 is taxable. Spent on college at 18, the higher education exception waives the 10% additional tax, so the bill is $10,220.48 of income tax and $79,436.26 is left. The same $200 a month in a 529 would be $86,144.21, all of it tax-free for qualified education: $6,707.95 more, even though the 529 never received a federal dollar.
The number that decides that matchup is the tax rate. These two tie at about 7.6%. At $25 a month instead of $200 the answer flips: $12,326.84 from the Trump Account against $10,768.03 from the 529, because the federal $1,000 is then a large share of a small account and its growth outweighs the tax.
How the money is taxed on the way out
This is the part that gets summarized wrongly most often, so here it is carefully. A Trump Account gives you tax-deferred growth, not tax-free growth. Nothing is taxed while it compounds. When money is withdrawn, your own contributions come back free because you already paid tax on them, and everything else is ordinary income: the federal $1,000, employer contributions, and all investment gains. Ordinary income rates are generally higher than long-term capital gains rates, which is why the plain brokerage account in the comparison table is more competitive than people expect. The IRA basis rules also apply pro rata, so you cannot withdraw only the tax-free part first.
Withdrawals before age 59.5 also meet a 10% additional tax on the taxable portion unless an exception applies. Two exceptions matter to families: qualified higher education expenses and up to $10,000 for a first home. Both waive the penalty. Neither makes the withdrawal tax-free, which is the single biggest difference from a 529.
Compare the three treatments side by side. A 529 is after-tax in, tax-free out, provided the money goes to qualified education. A Roth IRA is after-tax in, tax-free out, provided the owner waits until 59.5 and the account is five years old. A Trump Account is after-tax in for your own dollars, and ordinary income out on the federal deposit, the employer money, and the growth, whatever it is spent on. Each of the three is the best answer to a different question, which is what the comparison table on this page is built to show.
Which account wins, and the assumption that decides it
There is no single ranking. The calculator names the account with the most money left, and then names the assumption that decided it, because in every matchup one input is doing the work.
For college money, the deciding input is your marginal tax rate. A 529 pays no federal tax on qualified education spending, so it starts ahead on your own dollars. A Trump Account starts ahead by whatever the federal $1,000 has grown into. Below the tie rate the Trump Account is in front; above it the 529 is. Small accounts sit below the tie rate and large ones sit above it, which is why the answer flips between the two worked examples above.
For money the child will spend at 18 on anything else, the deciding input is the gap between ordinary income rates and capital gains rates. A withdrawal with no exception pays ordinary income tax plus 10%, while a taxable brokerage account settles up at long-term capital gains rates. In the worked example above, the brokerage account is the one that leaves the most for general spending at 18, despite paying tax on dividends every year along the way.
For retirement money, the deciding input is whether the child has earned income. A custodial Roth IRA needs earned income, and most young children have none. Where a teenager does have a summer job, the Roth is tax-free at the far end while a Trump Account is ordinary income, and that gap compounds for four decades. Where there is no earned income, the Roth is simply not on the menu.
One observation the arithmetic keeps producing, stated as arithmetic: the federal $1,000 exists only inside this account type. It cannot be moved to a 529, a Roth IRA, or a brokerage account. So those dollars, and whatever they grow into, sit outside the question of where your own contributions do best. The two decisions are separate, and the page keeps them separate.
What is not settled yet
As of August 2026 the Treasury and IRS regulations covering these accounts were proposed, not final. The mechanics of the pilot program contribution, the reporting rules, and several administrative details were still being worked out, and the IRS has already issued reporting relief for the first year. Details that could still move include how contributions are reported, how the pro rata basis calculation is documented on the beneficiary's own tax return years later, and how employer programs under Section 128 must be structured. The figures on this page are the rules on the books today. Before you act on any of it, read the official rules at trumpaccounts.gov and the guidance at irs.gov, and talk to someone who knows your own tax situation.