Have you heard about the new Trump account for tax-favored family savings? It’s been billed as a powerful new way to move money to children and grandchildren with minimal gift‑tax friction, but the guidelines around it (or lack thereof) have been perplexing.
What Is the Trump Account?
The Trump account was created under the Working Families Tax Cuts and codified in Internal Revenue Code Section 530A. It’s designed to hold cash for the benefit of a child or grandchild under age 18, with withdrawals generally restricted to qualifying family support and development expenses. Parents and grandparents are the primary target users, but any individual can contribute to a Trump account for a minor beneficiary, subject to annual and lifetime limits in the statute and related guidance.
But since its inception, practitioners debated whether Trump account contributions were “completed” gifts or gifts of a future interest, which can affect annual gift‑tax reporting and lifetime exemptions.
Enter Revenue Procedure 2026-25
To address this, the IRS issued Revenue Procedure 2026-25, establishing a Trump account as a transfer‑tax safe harbor: Qualifying contributions are treated as completed present‑interest gifts that fall under the annual per‑donee exclusion, and donors in the safe harbor do not have to file Form 709 solely because of those contributions.
To fall within the safe harbor for a given calendar year, all of the following must be true:
- The donor is an individual (not a trust, estate, or entity).
- The donor’s only taxable gifts that year are cash contributions (via cash, check, money order, or EFT) to one or more Trump accounts, each made before the calendar year in which the beneficiary turns 18.
- Total gifts to each beneficiary, including Trump account contributions and any other transfers, do not exceed the annual exclusion amount, currently $19,000 per donee, per year (with annual inflation adjustment).
- No gift‑tax return is otherwise required or filed for any reason (including portability elections or GST reporting).
Other Notes on the Trump Account
Within those parameters, the Trump account is a relatively clean way to stack annual‑exclusion gifts to minors while sidestepping Form 709 filing. The new guidance effectively confirms that, for many middle‑income and affluent families who stay inside the annual exclusion, Trump account funding can be a low‑risk, high‑efficiency strategy to pass along interest-bearing long-term savings to the next generation.
But it’s not zero risk, nor is it the best choice for everyone. High‑net‑worth donors who regularly make large gifts, gifts to trusts, or who rely on portability elections may quickly fall outside the safe harbor and still need careful gift‑tax reporting, for instance. Foreign donors may face additional complexity, including information‑reporting and cross‑border transfer‑tax issues highlighted in recent practitioner commentary. And even domestic donors who exceed the annual exclusion for a single beneficiary in a given year must file returns for all Trump account‑funded beneficiaries for that year, losing the filing relief.
Think of a Trump account as just one tool in a broader set of strategies that may include 529 plans, irrevocable trusts, direct tuition and medical payments, and business‑interest transfers. Before you rely on the safe harbor, it’s wise to model your full annual gifting pattern, lifetime exemption usage, and succession objectives.
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Photo purchased from Shutterstock_2662424667 | August 18, 2026