President Donald Trump’s sweeping tax-and-spending bill would seed a $1,000 “Trump Account” for every U.S. baby born from Jan. 1, 2025, through Jan. 1, 2029, giving parents a new, stock-indexed nest egg they could add to, but not touch, until the child turns 18.
What Happened: If parents do nothing, the Treasury would open the account at birth with a $1,000 federal deposit, reveals a White House press release. Families could contribute up to $5,000 a year and foundations could give more because gifts from tax-exempt entities do not count against the cap.
Sen. Ted Cruz (R-TX), who drafted the idea before it got a Trump rebrand, calls the starter stake “transformative” because it puts even non-investors “in the game.” Supporters argue the plan mirrors state-level “baby bond” initiatives such as Connecticut’s 2023 trust, and borrows from Sen. Cory Booker’s (D-NJ) Democratic plan to narrow the wealth gap with federally seeded children’s accounts.
Earnings would be taxed as long-term capital gains if spent on college, training, or a first home and would be penalized if used for other purposes, according to the Cruz proposal.
A Milken Institute paper by former SEC commissioner Michael Piwowar and economist Robert Shapiro estimates the $1,000 seed could average $8,000 in 20 years, $69,000 in 40 and $574,000 in 60, assuming historical stock returns.
Why It Matters: The House folded the provision into a 1,100-page package Trump touts as his “big, beautiful bill.” It now heads to the Senate, where Republicans must trim spending or rely on budget-reconciliation rules to secure 51 votes. Business lobbyists, including Dell Technologies (NYSE:DELL), Salesforce (NYSE:CRM), Uber Technologies Inc. (NYSE:UBER) and Goldman Sachs (NYSE:GS) have pledged to match worker contributions, but fiscal hawks warn the program’s $3-billion-a-year cost could rise if participation is high.
Some advisers applaud the concept yet question the design. Russell Investments CEO Zach Buchwald told PlanAdvisor the measure “misses a critical piece” by skipping dedicated retirement features. Zach Teutsch, managing partner at Values Added Financial, told Yahoo Finance the account looks “ill-considered” beside 529 college plans or Roth IRAs, which offer tax-free withdrawals.
Handing every newborn $1,000 to invest in stocks both violates the Constitution, argues economist Peter Schiff. He says Washington should cut today’s deficit instead of adding debt that children will have to repay tomorrow.
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