--- title: '$1,000 Baby Bonus: What to Know About ''Trump Accounts'' for Newborns' description: Trump Accounts will give newborns a $1,000 federal bonus in a tax-deferred fund to boost savings for college, a home or starting a business. authors: - name: Liliana Hall role: Reporter url: https://money.com/author/liliana-hall/ bio: Liliana Hall joined Money in 2025. She is an Austin-based reporter for Money, where she covers a range of topics, including financial news, policy, banking, investing, passive income, financial planning and student loan debt. education: University of Texas at Austin at_money_since: 2025 articles: 134 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Pets - Retirement - Shopping - Taxes social: - https://x.com/lilihallllllll - https://www.linkedin.com/in/liliana-hall/ editors: - name: Katherine Peach role: Associate Editor url: https://money.com/author/katherine-peach/ bio: Katherine Peach is an associate editor with a focus on news and email at Money. She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!) Katherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others. Katherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. She is a member of Phi Beta Kappa. education: University of Maryland, Baltimore County at_money_since: 2025 articles: 14 covers: - Economy and Politics - Banking - Career Advice - Credit - Credit Cards - Debt - Education - Federal Reserve Rate Cuts - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes published: '2025-07-08T19:18:19.000Z' modified: '2025-07-08T19:18:19.000Z' section: Economy and Politics tags: - News word_count: 950 canonical: https://money.com/trump-accounts-bill-newborn-1000-savings/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of a baby bottle with money wrapped around it](https://img.money.com/2025/05/News-Trump-1000-Baby-Policy.jpg) On Friday, President Donald Trump signed into law his sweeping tax package, dubbed the [“big, beautiful” bill](https://www.congress.gov/bill/119th-congress/house-bill/1/text), which includes a new savings account for children that comes with a one-time baby bonus. The new birth-based custodial accounts, often referred to as "Trump Accounts, are designed as long-term investment accounts for newborns. Initially funded by a $1,000 contribution from the federal government, these accounts are tax-preferred and remain tied up until the account holder turns 18. The goal, according to proponents, is to give young Americans a financial head start and encourage wealth-building from birth. In a [press release](https://www.whitehouse.gov/articles/2025/06/trump-accounts-will-chart-path-to-prosperity-for-a-generation-of-american-kids/), the White House said these accounts "will afford a generation of children the chance to experience the miracle of compounded growth and set them on a course for prosperity from the very beginning." Here’s everything you need to know about the new savings accounts, from who’s eligible to how they stack up against more traditional investment vehicles such as 529 plans. ## Give the next generation a financial head start with SoFi® ### While "Trump Accounts" are on the horizon, you can begin building wealth for their future today. Open an FDIC-insured SoFi® High-Yield Savings Account and start earning. Click on your state to find out more. [View Rates](https://money.com/pr/iaf1a6b31766?ap_referrer=%2Ftrump-accounts-bill-newborn-1000-savings%2F) ## What is a Trump Account? The Trump Account is a tax-deferred investment account that the Department of the Treasury will automatically open for every eligible child born between Jan. 1, 2025, and Jan. 1, 2029. Each account will receive a one-time $1,000 deposit from the federal government. Friends and family can also contribute up to $5,000 per year to the account. Parents can also open a "Trump Account" for any child under 18 who was born before 2025— but they won't receive the $1,000 government contribution. Funds in the account will grow tax-deferred, meaning gains won't be taxed annually. However, qualified withdrawals — for expenses such as college, a first home or starting a business — will be taxed at the long-term capital gains rate. Non-qualified withdrawals will be taxed as regular income. Trump accounts will function less like savings accounts and more like brokerage accounts with funds invested and potentially subject to market fluctuations. With that in mind, it's similar to a custodial brokerage account, where a parent or guardian manages investments on behalf of a minor. ## Who's eligible for a Trump Account? Children born between Jan. 1, 2025, and Jan. 1, 2029, will be automatically enrolled in the program by the Department of the Treasury. To qualify, the child must be a U.S. citizen with a Social Security number. (A [recent revision to the bill](https://www.nytimes.com/interactive/2025/06/30/upshot/senate-republican-megabill.html) removed the requirement that the child must have at least one parent who is a U.S. citizen). ## What can the funds be used for? Trump Accounts allow tax-preferred withdrawals for qualified expenses, including educational expenses, buying a home and starting a business. ## When can the money be accessed? The funds will be tied up until the account holder turns 18. At that point, the account holder may withdraw up to 50% of the funds for qualified expenses without facing regular income tax. At age 25, the account holder can withdraw up to 100% of the balance for the same aforementioned qualifications. After age 30, the funds can be withdrawn for any reason. ## How long could contributions be made? Contributions can be made until the account holder turns 18, up to the annual contribution limit of $5,000. ## How Trump Accounts stack up While the so-called Trump Account offers a new way to kickstart savings for the next generation, it's not without trade-offs. Many financial planners say families may be better off contributing to a 529 plan — especially when saving for education. "For educational purposes, the 529 is the clear winner," Dave Fortin, a chartered financial analyst, told Money. "That said, the traditional education path may not be what all families are targeting." Unlike 529 plans, which allow tax-free withdrawals for qualified educational expenses, Trump Accounts would still incur taxes on earnings **—** even for qualified uses that go beyond education, although at the long-term capital gains rate. Another key difference? Access. Withdrawals from a Trump Account wouldn't be allowed until the child turns 18 — a potential risk, Fortin said. Although 529 plans are used primarily to pay for college, what counts as a qualified expense has expanded in recent years. Trump's tax bill will extend them even further, raising the annual limit for K-12 expenses from $10,000 to $20,000 starting next year. If you're paying for K-12 tuition, a 529 plan would offer earlier access to funds than a Trump Account, Fortin added. And while Trump Accounts cap annual contributions at $5,000, the contribution limit for a 529 is much higher. In 2025, [you can deposit up to $19,000](https://www.fidelity.com/learning-center/smart-money/529-contribution-limits) per beneficiary (or up to $38,000 for married couples) without triggering the lifetime gift tax exclusion. The main advantage of the Trump Account? Every baby born between 2025 and 2028 would automatically receive a $1,000 government-funded deposit. Free money is free money. Still, the $1,000 bonus likely won't significantly change how most families save for college, says Jordan C. Kaufman, a certified financial planner at Green Ridge Wealth Planning. However, it could prompt parents to start thinking about the cost earlier — and that can be valuable. ## Are Trump Accounts available yet? Not quite, but the groundwork is being laid. Trump Accounts are officially authorized under the "big, beautiful bill" that Trump signed into law on July 4. While the government now has the authority to create these accounts for eligible newborns through 2028, there's no indication that the program is operational yet. The government is likely still finalizing key logistics, which means some details could change before the official rollout begins. ### Up to 2-day-early paycheck ![View Rates](https://s3.consumersadvocate.org/prd/image/image/19227/medium_5c3a0d96-3da5-45d8-8e99-d58f043e9433.png) Our Partner [View Rates](https://money.com/go/5ae06c92d8b9?bidid=4111940938&pmeta=p129-c561-u39720&ptid=670514195&ptoken=f33c4302b4ff2a97494141d5023e6eb6) ### No monthly maintenance fees ![View Rates](https://s3.consumersadvocate.org/prd/image/image/7510/medium_8a6feaaf-bb2a-4668-a20d-603241767f86.png) Our Partner [View Rates](https://money.com/go/13f2168c7256?bidid=4111940934&pmeta=p129-c561-u39720&ptid=670514195&ptoken=3f067ee8b54593a0b56341653fc28771) ### Open an account in 5 minutes ![View Rates](https://s3.consumersadvocate.org/prd/image/image/40232/medium_cfa5e5b0-4ccd-4dc6-814f-910bb4151eb3.webp) Our Partner [View Rates](https://money.com/go/d3a051ac67a3?bidid=4111940943&pmeta=p129-c561-u39720&ptid=670514195&ptoken=e000b39374ea5011cb922f55afc17aa5) ### $500 minimum opening deposit ![View Rates](https://s3.consumersadvocate.org/prd/image/image/35396/medium_03f248f6-d7f4-4da6-8f13-322fce5d1be2.webp) Our Partner [View Rates](https://money.com/go/e70324a1ae5e?bidid=4111940949&pmeta=p129-c561-u39720&ptid=670514195&ptoken=8c2ab3c5fa44bf2b94e0e1c5e6176419) ![](https://s3.consumersadvocate.org/prd/image/image/19227/medium_5c3a0d96-3da5-45d8-8e99-d58f043e9433.png) With a Savings Account from SoFi®, you can save money while earning it [View Rates](https://money.com/pr/s46e80315d91?ap_referrer=%2Ftrump-accounts-bill-newborn-1000-savings%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/trump-accounts-bill-newborn-1000-savings/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "News", "item": "https://money.com/tag/news/" }, { "@type": "ListItem", "position": 4, "name": "$1,000 Baby Bonus: What to Know About 'Trump Accounts' for Newborns" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/trump-accounts-bill-newborn-1000-savings/#webpage", "url": "https://money.com/trump-accounts-bill-newborn-1000-savings/", "name": "$1,000 Baby Bonus: What to Know About 'Trump Accounts' for Newborns", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2025-07-08T19:18:19.000Z", "mainEntity": { "@id": "https://money.com/trump-accounts-bill-newborn-1000-savings/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/trump-accounts-bill-newborn-1000-savings/#breadcrumb" }, "dateModified": "2025-07-08T19:18:19.000Z" }, { "@type": "NewsArticle", "headline": "$1,000 Baby Bonus: What to Know About 'Trump Accounts' for Newborns", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2025/05/News-Trump-1000-Baby-Policy.jpg", "width": 2880, "height": 1920, "caption": "News-Trump-1000-Baby-Policy" } ], "author": [ { "@type": "Person", "name": "Liliana Hall", "url": "https://money.com/author/liliana-hall/", "@id": "https://money.com/author/liliana-hall/#author", "description": "Liliana Hall joined Money in 2025. 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She didn’t always intend to write about money. She’s a classically trained pianist who dreamed of becoming an archaeologist. However, in 2007 Katherine began working in financial publishing as an editor for Agora Inc. (Apparently, unearthing ideas about improving your personal finances isn’t such a bad career alternative!)\r\n\r\nKatherine’s writing and editing work has been featured in Investing Daily, Clever, Investor Junkie, The Palm Beach Letter, Truth & Plenty, Independence Monthly, NICHE, AmericanStyle, AntiqueWeek, Millennial Money, Money Done Right, TheStreet, Sure Dividend and many others.\r\n\r\nKatherine holds a Bachelor of Arts in Ancient Studies with concentrations in Archaeology and Ancient Languages and a minor in Literature from the University of Maryland, Baltimore County. 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