Tracking the 2025 Senate Tax Bill: Trump Accounts (a.k.a. child savings plans)

At Ascensus, we have always believed that saving is one of the most powerful tools individuals can use to build financial security. As one of the country’s leading administrators of tax-advantaged savings plans, we serve more than 16 million people who are saving for retirement, education, and disability-related expenses. We are proud to be a dedicated advocate for the American saver—monitoring public policy, offering insights, and helping individuals navigate change with clarity and confidence.

That is why we are encouraged to see that the preliminary Senate version of the 2025 tax reconciliation bill preserves a forward-looking proposal first introduced in the House in May: the creation of birth-based savings accounts or Trump Accounts. While still moving through the legislative process, this idea signals growing interest in establishing a birth-based savings plan for children and making it easier for families to begin saving earlier than ever before.

We believe this proposal could provide a strong foundation for future financial well-being, particularly when supported by smart policy design and practical implementation.

What Are Trump Accounts?

The legislative proposal introduces a simple but powerful idea: allow families to open a savings account at birth, giving every American the chance to start saving from day one. These accounts would generally function like standard taxable investment accounts, with annual contributions capped at $5,000 and earnings subject to capital gains tax. Effectively, these accounts would serve as a new kind of tax-advantaged, long-term savings account for Americans.

To jumpstart participation, the U.S. government is launching a pilot program that would make a one-time $1,000 deposit into these new tax-advantaged savings vehicles, called Trump Accounts, for children born after December 31, 2024, and before January 1, 2029. To qualify, the child must be a U.S. citizen at birth and have a Social Security number. Also, both parents must have Social Security numbers. The accounts would be available to all U.S. citizens under the age of eight.

Key features include:

• Annual contributions up to $5,000 until the child is 18 years old.
• Earnings grow tax-deferred. Qualified withdrawals are taxed as long-term capital gains.
• Partial access begins at age 18 for education, starting a business, or purchasing a home.
• Full access begins at age 25, with unrestricted use allowed at age 30.

What sets these accounts apart is not just the tax treatment, but the timing. The Trump Accounts enable both early saving and early investing, giving an entire generation of children the opportunity to experience the power of compounding from an early age, setting them on a path toward long-term financial well-being.

With 3.6 million U.S. births annually and 62% of Americans owning stock, a figure closely tied to income, education, age, and race, this proposal could broaden market participation and give the next generation a meaningful head start.

Why Starting Early Matters

To illustrate the impact of early saving and investing, consider two hypothetical savers:

• Emma saves through a Trump Account and receives the one-time $1,000 contribution at birth from the government, and an additional $500 in annual contributions also beginning at birth from her parents. She stops contributing at age 18, but the account continues to grow.
• Noah saves through a traditional investment account, begins contributing $500 per year at age 30 and continues until age 65.

Assuming a hypothetical average annual return of 7 percent, Emma’s account could grow to more than $567,822 by retirement, despite only 18 years of contributions. In contrast, Noah’s account would grow to around $79,669, even though he contributes for 35 years.

This example highlights the incredible value of starting early. By giving every American the ability to begin saving and investing at birth through a federal savings account, we can fundamentally shift the trajectory of long-term wealth accumulation and promote a secure financial future.

Why Ascensus Supports This Proposal

As a purpose-driven company focused on helping more individuals save more, Ascensus sees tremendous potential in this birth-based savings program. These accounts could:

• Help families build wealth from the earliest stages of life,
• Encourage lifelong saving habits and financial literacy for families,
• Expand access to investment tools and long-term planning opportunities,
• Promote intergenerational financial well-being.

Ascensus supports the introduction of the Trump Accounts and recommends several practical changes to strengthen its impact:

• Make Enrollment Automatic
  Creating accounts automatically at birth would expand access and simplify participation. The Treasury Department could work with the Social Security Administration to use the existing Enumeration at Birth (EAB) program to streamline this process. This would ensure that the government starter savings account is available to every eligible child without delay.
• Remove the 50 Percent Withdrawal Limit for Ages 18 to 24
  Restricting young adults to only half of their account balance may create unnecessary challenges. Beneficiaries might need full access to funds for education and other relates expenses. Removing this limit would give them greater flexibility and reduce administrative complexity.
• Allow Accounts to Be Opened After Age Eight
  Increasing the age limit for account creation would help more children benefit, particularly those whose families could not establish an account early on. Saving earlier is better, but access should not be cut off too soon. Even if the savings account at birth is missed, a window to establish an account should remain open.
• Extend Account Availability Until Age 40
  Today, many major financial milestones happen later in life. First-time homebuyers are often in their late 30s, and many entrepreneurs start businesses in their 40s. Extending account availability until age 40 would give savers more time to use their funds meaningfully and align with real-world financial timelines.

These adjustments would make Trump Accounts more accessible, flexible, and aligned with the financial journeys of American families.

Looking Ahead

While the 2025 tax legislation is still progressing through Congress, the inclusion of Trump Accounts reflects a growing recognition that American families need earlier and easier ways to save. Ascensus will continue to advocate for policy solutions that support long-term financial well-being and will be ready to help individuals and institutions adapt to these changes.

In addition to Trump Accounts, the proposed legislation includes important updates to the 529 plan expansion and ABLE account provisions. For more on those enhancements, read our companion article:
Expanding Opportunities: What the 2025 Tax Bill Means for 529 and ABLE Savers

Every individual should have the opportunity to build financial security over time. Creating that opportunity as early as birth could make a meaningful difference in helping more people reach their goals.