Q: What are “Trump Accounts,” and how can they help me with my taxes?
A: Trump Accounts are a new type of investment account for children created under the 2025 tax law. While they offer some tax benefits, their primary value is not immediate tax savings – it’s long-term investing.
These accounts can be opened for children under age 18 who have a Social Security number.
Here’s how they work:
Contributions are not tax deductible. Money added to a Trump Account is made with after-tax dollars, meaning there is no immediate tax benefit when contributing.
Growth is tax deferred. Investments in the account grow without being taxed each year. This allows the funds to compound over time.
Withdrawals are taxed later. Once the child reaches adulthood (generally age 18), funds can be accessed – but withdrawals are taxed as ordinary income, similar to a traditional IRA.
There is a government-funded $1,000 starter contribution. For children born between 2025 and 2028, the government provides $1,000 of seed money once the account is opened and eligibility is confirmed.
The account is designed for long-term use. Although funds become accessible at age 18, the structure encourages continued investment rather than immediate spending.
The bottom line: Trump Accounts aren’t a major tax break upfront – they’re a long-term investment tool for children. The real advantage comes from tax-deferred growth, early investing and the $1,000 government contribution, which together can create meaningful value over time.
Send questions about your taxes to Vincent Hicks, a CPA based in Cambridge who has more than 20 years of experience, at vincent@hickscpasolutions.com. You can call Hicks at (859) 553-0788.
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