Donald Trump is pushing cash for all American babies. What are ‘Trump Accounts’? Explained

US President Donald Trump wants to make a significant but limited investment in newborn babies through his ‘Big Beautiful Bill’. On Monday, the president touted a provision in his tax cut bill that proposes opening investment accounts for all American babies born during Trump’s current term as President.

These accounts have been dubbed “Trump Accounts”, and families of all income levels could receive them. The “Trump Accounts” pilot program is included in the ‘One Big Beautiful Bill’.

What are ‘Trump Accounts’?

Simply put, these are new tax-exempt investment accounts to benefit all American children. An earlier version of the bill called them MAGA Accounts, referring to the president’s Make America Great Again campaign slogan.

During a roundtable on Monday, Trump said, “For every US 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 the child’s guardians.

This provision means that every US citizen born between the start of 2025 and the end of 2028 would receive $1,000 initially from the federal government in a tax-deferred account. The accounts would, over the course of a child’s first 18 years, be linked to a mutual fund or index fund tied to the performance of the stock market.

The initiative further allows parents to contribute additionally — up to $5,000 tax-free each year to “Trump Accounts”.

The money would only be accessible to the child upon reaching adult status at 18. At age 18, children could withdraw the money to put toward a down payment for a home, education or to start a small business. If the money is used for other purposes, it’ll be taxed at a higher rate.

The full balance would be available at age 30, USA Today reported.

How much will the program cost?

With about 3.6 million babies born in the US each year, the cost could exceed $3 billion annually, the Washington Post reported. Republicans have yet not released any cost estimates for the program.

Why Trump is pushing cash for babies

1. To give boost to Big Beautiful Bill

Amid criticism from several people, including former aide Elon Musk, Trump is trying hard to get his ‘Big, Beautiful’ tax and spending bill approved by the Senate. On Monday, Trump worked the phones and took to social media to try to sway Republican holdouts on his multi-trillion-dollar tax bill.

Trump further promoted the program as a pro-family, pro-child initiative at a time when his administration and congressional Republicans are facing criticism over cuts that the tax, spending and immigration bill would make to programs like Medicaid and the Supplemental Nutrition Assistance Program.

It’s feared that the tax and spending cut package will add more than $3 trillion to the US national debt over the next decade.

The House of Representatives approved the bill by one vote last month. It now faces opposition from both moderates and ultra-conservatives in the Senate.

2. Wealthy and poor divide

Many in favour of this provision say that it doesn’t distinguish between the rich and the poor.

The Trump program is similar to “baby bond” programs run in California, Connecticut and Washington, D.C, according to the Washington Post.

The report says that while those local programs were created to reduce the wealth gap by supporting children in need or lower-income families, Trump accounts will be made available to Americans regardless of their socioeconomic status.

Moreover, USA Today reported that the program serves as a counter to Democratic arguments that the bill helps the nation’s wealthiest Americans.

Meanwhile, a statement from the White House said, “The One Big Beautiful Bill will change the lives of middle-class families across America” — “together with historic tax cuts, an increased child tax credit, higher wages, and monumental economic growth.”

3. ‘Strong start at life’

President Trump said on Monday that the mega bill would “make it possible for countless American children to have a strong start at life at no cost to the American taxpayer.”

Meanwhile, Dell CEO Michael Dell said, “With these accounts, children will be much more likely to graduate from college, to start a business, to buy a home, and achieve lifelong financial stability.”

Amid the buzz over “Trump Accounts”, Donald Trump gathered corporate leaders at the White House Monday to highlight a provision in his tax bill that would deposit $1,000 into an investment account for babies born in the next few years.

Dell Technologies, Salesforce, Uber and Goldman Sachs were among the companies the White House said would be participating.

“They’ll really be getting a big jump on life, especially if we get a little bit lucky with some of the numbers and the economy,” the US President said.

3. Addressing child poverty

While the investment would be symbolically meaningful, it’s a relatively small financial commitment to addressing child poverty in the wider $7 trillion federal budget, Bloomberg reported. It added that assuming a 7 per cent return, the $1,000 would grow to roughly $3,570 over 18 years.