When President Donald J. Trump signed the “Big Beautiful Bill,” with it came a novel social policy: child-focused stimulus savings accounts.
OBBBA aims to stimulate the U.S. economy, and one of the methods to do so is by encouraging both family formation and long-term financial habits. Donald Trump framed the initiative bluntly: “investing in children is investing in America’s future.”
Donald J. Trump Truth Social 06.10.25 01:17 PM EST
The $1,000 child Trump Accounts are a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation—They are fully funded through targeted reforms in the One Big… pic.twitter.com/5oUW1L4j76
— Commentary Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) June 10, 2025
One of the bill’s most innovative benefits is the introduction of “Trump Accounts,” which will be started by the federal government for children born between 2025 and 2028.
According to the provision, each qualifying child will receive a $1,000 deposit into a tax-deferred account. This account will be managed under IRS-authorized institutions at birth. It is similar to a hybrid of a 529 plan and a Roth IRA.
Parents or guardians can contribute up to $5,000 annually. In some instances, this contribution can also be through the employer of the parents. In some cases, the contribution can go up to $2,500, and it will be excluded from taxable income.
These funds must remain invested until the beneficiary is 18 or older. The withdrawal of the funds also comes under the condition that withdrawals must be used for qualified purposes such as higher education, home purchase, or retirement.
If these funds are left untouched and are invested in moderate-risk index funds, they could be more beneficial. The compounding interest could create substantial amounts, and growth could be significant.
The White House has projected that a child born in 2026 whose family makes maximum contributions might see an account balance of $303,800 by age 18. And if the child waits for another 10 years, it could be around $1,091,900 by age 28.
TRUMP: “For every U.S. Citizen born after December 31, 2024, before January 1, 2029, the federal government will make a one-time contribution of $1,000 into a tax-deferred account that will track the overall stock market.”
“These accounts will be private property controlled by… pic.twitter.com/mzuGnPTqpk
— Breaking911 (@Breaking911) June 9, 2025
The plan suggests that even if there are no additional contributions, the seed money could grow into tens of thousands of dollars over time.
Starting in 2026, contributions of up to $5,000 are allowed into Trump Accounts. This has been indexed against inflation. The expanded child tax credit and adjustments to the SALT deductions may end up easing the tax burden for many middle-income families.
The Trump Account provision has sparked a debate. Treasury Secretary Scott Bessent has also stirred a controversy by calling these accounts a potential “backdoor for privatizing Social Security.” Bessent has been suggesting that massive earnings in personal accounts might replace interest in traditional social insurance.
Critics have also warned that opening millions of accounts with seed money could result in underused or abandoned funds. It would be similar to forgotten 401(k)s. Critics have also questioned whether the burden of cost for so many accounts and seed money on the federal budget is substantial.
There are other concerns, too. As many have noted, the very idea of the government opening accounts for minors without clear opt-in could raise privacy and consent concerns, too.
The headline of $1,000 at birth is attention-grabbing, yet one has to remember that the true value depends heavily on additional contributions and market performance. For families that are unable to make contributions, the long-term payoffs will be modest at best.
Along with this, if a family plans a child solely for seed money, it could lead to child abuse cases, too. Some analysts have cautioned that the return on these stimulus-like accounts may not be uniform across households.
