New Treasury guidance lets employers add up to $2,500 a year to Trump Accounts tax-free, giving families another way to save for children.
Trump Account tax breaks are getting a new boost as the Treasury Department moves to make employer contributions easier for families to use. On Tuesday, the department said businesses can now contribute up to $2,500 each year to Trump Accounts for workers or their dependent children without that money counting as taxable income for the employee.
The guidance also gives employers a clearer path to set up payroll programs that let workers send pre-tax wages into Trump Accounts for dependents. Treasury Secretary Scott Bessent said the changes are meant to help families build long-term wealth for children from the start. “Trump Accounts are giving American families a new way to build wealth from day one,” Bessent said. He added that the updated rules would let employers contribute tax-free while workers make pre-tax contributions directly to the accounts.
Trump Accounts were created under President Donald Trump’s Working Families Tax Cuts as long-term investment accounts for children. Parents, guardians and other authorized adults can open one for an eligible child before the calendar year in which the child turns 18. In general, contributions from individuals and employers together can reach $5,000 a year, with the employer side capped at $2,500 and excluded from taxable income if the program meets the requirements. Those limits are set to rise with inflation after 2027.
The accounts also carry a separate federal benefit for some younger children. Eligible U.S. citizen children born between Jan. 1, 2025, and Dec. 31, 2028, can receive a one-time $1,000 government contribution after an election is made to establish a Trump Account for them. That federal payment does not count against the annual $5,000 contribution limit. The money is not meant to sit idle either. Federal rules generally require it to be invested in qualifying mutual funds or exchange-traded funds that track the S&P 500 or another qualifying index made up mainly of U.S. companies.
“New Treasury guidance lets employers add up to $2,500 a year to Trump Accounts tax-free, giving families another way to save for children.”
Tuesday’s Treasury guidance is aimed at getting more employers involved. Companies that want to offer a Trump Account contribution program will generally need a separate written plan, plus notices and annual statements for participating workers. They also must handle reporting tied to the trustee overseeing the account. Employers can usually depend on workers to certify a child’s age and dependent status, but companies still have to make sure the money is being sent to qualifying Trump Accounts.
Treasury said more than 50 companies have already committed to contributing to Trump Accounts for their workers. Several large firms have also moved ahead with their own plans. Chime CEO Chris Britt said the fintech company plans to offer an employee match. Franklin Templeton plans to match the federal government’s one-time $1,000 payment for eligible children of U.S. employees, and State Street has announced a similar offer for eligible children of active workers. Vanguard says employees will be able beginning in 2027 to direct a $1,500 employer contribution from an existing benefits program into an eligible Trump Account. Visa also plans to provide a company match tied to the government’s one-time $1,000 contribution.
The new guidance gives employers more flexibility and gives parents another tax-advantaged way to invest for children’s futures. For American families trying to stretch every dollar, the change could make Trump Accounts a more practical tool for long-term saving.
Frequently asked questions
What changed in the Treasury guidance?
The Treasury Department said employers can contribute up to $2,500 annually to Trump Accounts without that amount counting as taxable income for workers.
Who can open a Trump Account for a child?
Parents, guardians and other authorized individuals can establish an account for an eligible child before the year the child turns 18.
Which children can get the federal $1,000 contribution?
Eligible U.S. citizen children born between Jan. 1, 2025, and Dec. 31, 2028, can receive the one-time federal contribution after an account election is made.
What companies have announced plans to participate?
Treasury said more than 50 companies have committed to contributions, including Chime, Franklin Templeton, State Street, Vanguard and Visa.
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