United States Capitol Building
The Treasury Department and IRS have released Notice 2025-68, providing initial guidance on Trump Accounts, a new type of IRA created under the One Big Beautiful Bill Act. As tax practitioners field questions from clients about these accounts and related proposals for tariff dividend payments, understanding the mechanics and limitations of both initiatives is essential.
Trump Accounts represent tax-advantaged investment vehicles for children. The federal government will make a one-time $1,000 pilot program contribution for each eligible U.S. citizen child born between January 1, 2025 and December 31, 2028, provided an election is made before the child turns 18. A Dell Technologies donation of $6.25 billion will supplement the government program by providing $250 accounts to 25 million additional children aged 10 and under from ZIP codes with median household incomes below $150,000.
The contribution rules create planning opportunities for clients. Parents and others can contribute up to $5,000 annually per child to Trump Accounts, with these limits indexed to inflation beginning in 2027. Employers can contribute up to $2,500 per year through an employer Trump Account contribution program, and these employer contributions do not count toward the employee's taxable income while still counting against the $5,000 annual limit. Qualified general contributions from governmental entities and charities are also permitted. No contributions can be made before July 4, 2026.
From an investment perspective, Trump Account funds must be invested in mutual funds or ETFs tracking the S&P 500 or similar American equity indices. The accounts grow tax-free but are generally inaccessible until January 1 of the calendar year the child turns 18. After that date, Trump Accounts are treated as traditional IRAs subject to standard IRA rules, meaning distributions will be taxable to recipients. Form 4547 will be used to establish accounts and enroll in the pilot program.
Separately, President Trump has proposed $2,000 "tariff dividend" payments to low and middle-income Americans, claiming tariff revenues will cover the cost. However, Tax Foundation modeling reveals significant fiscal challenges with this proposal. The analysis estimates three design options costing between $279.8 billion and $606.8 billion, depending on income cutoffs, phaseout structures, and whether dependents and non-filers qualify. The most comprehensive design mirrors pandemic stimulus checks with varying phaseouts by filing status and costs $606.8 billion.
The critical issue for practitioners explaining these proposals to clients is that tariff revenues fall far short of covering dividend costs. The president's new tariffs are projected to generate only $158.4 billion in 2025 and $207.5 billion in 2026 after accounting for income and payroll tax offsets. Every modeled tariff dividend design exceeds 2025 revenue, and most would consume all or most of 2026 revenue as well. If repeated annually, the most expansive option would cost nearly $6 trillion over ten years against $2.3 trillion in projected tariff revenue.
Tax practitioners should counsel clients that while Trump Accounts offer a legitimate tax-advantaged savings vehicle with clear rules now established, proposed tariff dividend payments remain speculative and would require Congressional action. The fiscal math suggests tariff dividends are unlikely to materialize as described, leaving Trump Accounts as the tangible benefit currently available to families with young children.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
Subscribe to the TPN Newsletter!
Like what you're reading?
Subscribe to our FREE newsletter and we'll deliver content like this directly to your inbox.