22-05-2025
‘Trump Accounts' for babies? New 'big, beautiful tax bill' revives ‘baby bonds'—newborns could get $1,000
More than 71 million people are enrolled in Medicaid in US
Synopsis A Republican-led tax bill proposes giving every American baby born between 2025 and 2028 a $1,000 government-funded investment account — now dubbed a "Trump Account." Initially called a "MAGA Account," the savings plan sparked debate for its overt political branding and limited tax advantages. The renamed accounts are part of a broader $4 trillion fiscal package designed to showcase loyalty to Donald Trump while promoting early financial literacy. Experts, however, question the plan's financial efficacy compared to existing savings options. In a bold move to brand financial policy with political allegiance, House Republicans have unveiled a proposal to deposit $1,000 into an investment account for every American child born between 1 January 2025 and 1 January 2029. Originally labelled a 'MAGA account,' the savings initiative has now been rebranded simply as a 'Trump account.'
ADVERTISEMENT The shift in name came via a last-minute amendment to the party's sweeping fiscal package, nicknamed the 'One, Big Beautiful Bill.' The rename strips away any subtlety, making it crystal clear that Republicans want the public to associate the financial gift with President Donald original proposal described the account as a 'money account for growth and advancement,' or MAGA — an acronym that echoes Trump's iconic campaign slogan. Yet even that was deemed too understated. So Republicans revised the bill late Wednesday, just ahead of a planned vote.
'The Trump Accounts would seed $1,000 for every American baby born starting in 2026,' the bill can contribute up to $5,000 annually into the accounts, and if they fail to open one, the government will do it for them. Funds must be invested in a broad stock index and can only be withdrawn for specific uses such as higher education, starting a business, or buying a made for other reasons would be taxed as ordinary income, not capital gains — a detail that has raised eyebrows among financial professionals. As financial adviser Ann Reilley put it, 'It's not very attractive. It just seems like they're complicating things for no reason.'
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Also Read: US House Rules Committee clears Trump's big tax-cut billUnlike tax-advantaged plans like 529 education accounts or Roth IRAs, Trump Accounts offer fewer benefits. Gains are taxed unless used for a narrow list of approved purposes, and contributions must be made with post-tax income.
ADVERTISEMENT 'The giving kids money aspect is generally good,' said Zach Teutsch, a managing partner at Values Added Financial. 'The account structure seems ill-considered.'
He added, 'A family would need to be shockingly sure that their child wasn't going to college before it would make sense to invest in a MAGA account instead of a 529.'
ADVERTISEMENT The overt political branding sparked a sharp response from Democrats during a House Rules Committee hearing.'You all would be screaming bloody murder if we named savings accounts after Barack Obama,' said Rep. Joe Neguse (D-Colo.).
ADVERTISEMENT Rep. Mary Gay Scanlon (D-Pa.) added, 'Why don't we call it the Trump Diaper Savings? It could be TDS, because I think the only way you end up with a stupid name like this is if you have TDS.'
Also Read: Republicans proposing nearly $1 trillion in cuts to Medicaid and food stamps. Will you be impacted? The Trump Account proposal joins a growing list of Republican efforts to enshrine Trump's name into federal policy. Other proposals have included putting his face on the $100 bill, renaming Washington Dulles International Airport, and even allowing him a third presidential term. One bill would even give Trump authority to negotiate the purchase of Greenland — a plan that included renaming the island 'Red, White and Blueland.'The Trump Account is arguably the most likely of these symbolic tributes to actually become law.
Also Read: When will Trump's 'Big, beautiful Bill' be passed? The broader concept of giving every child a start-up fund isn't new. Democrats have long promoted 'baby bonds' to reduce inequality. Senator Cory Booker (D-N.J.), for instance, proposed $1,000 savings accounts for all babies during his 2020 campaign.
Republicans, led by Senator Ted Cruz, have rebranded the idea as a capitalist initiative. 'There are many Americans who don't own stocks or bonds, are not invested in the market, and may not feel particularly invested in the American free enterprise system,' Cruz told Semafor. 'This will give everyone a stake.' 'You see a lot of young people who in public opinion surveys say they have a negative view of capitalism and they embrace socialism,' Cruz added. 'And what is powerful about this is, when every child has invested, it's no longer an abstract idea.'Cruz said that enthusiasm for the idea is spreading among CEOs. At the recent Milken Conference in Los Angeles, he claimed executives from companies like Uber, Dell, Nvidia, and Oracle expressed interest in contributing to employee children's accounts.'This is essentially a 401k for every newborn in America,' Cruz said. 'What is powerful is enabling every child in America to have an investment account and a stake in the American free enterprise system.'The pilot programme is expected to cost the government around $17 billion over 10 years, a relatively small slice of the $4 trillion tax package. According to Alan Cole of the Tax Foundation, 'It's like, thank you government for the free money, but I care about the usefulness.'
Despite limited tax advantages and practical constraints, the Trump Account could mark a lasting imprint on American savings policy — or at the very least, a political one. The fate of the programme now lies with Congress, where even slim Republican majorities may not guarantee its survival.
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