The One Big Beautiful Bill Act, or OBBBA, was passed by Congress and became law on July 4, 2025. The new law covers a lot of ground, making changes to Medicaid, SNAP benefits, taxes and immigration. One provision, the Trump Account, aims to give the next generation a better financial future by encouraging long-term savings. Read on to learn what this provision is and how much you can make with a $1,000 contribution.
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What Is the Trump Account Provision?
The OBBBA states that American minors can set up a Trump Account in which they can invest and grow a certain amount of money tax-free over time. Eligible children born between Jan. 1, 2025, and Dec. 31, 2028, will receive a one-time deposit of $1,000 from the government to get them started.
Parents, guardians, employers, organizations and other individuals can make contributions to a child’s Trump Account up to a specific amount annually. As of now, individuals can deposit $5,000 per child per year, and employers can add another $2,500 to the child’s account. This additional $2,500 contribution from employers doesn’t count as taxable income to the employee.
Trump Account holders can only invest in exchange-traded funds (ETFs) or mutual funds that track the S&P 500 or other American stock indexes. Account holders also cannot make any withdrawals until they turn 18. Even though investments grow tax-free in the account, the account holder must pay taxes on withdrawals the same way they would with a traditional IRA. This means they must pay income taxes on what they withdraw, based on the tax bracket they fall into.
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How Much Can They Make With $1,000?
If you have a child in 2026 who receives a $1,000 deposit in their Trump account, you have no obligation to continue making contributions. If invested in an ETF or mutual fund and left alone, the funds will grow over time.
The White House estimated how high account balances could grow when account holders reach age 18 under various scenarios. With only the initial government contribution of $1,000, an 18-year-old account would reach $2,577 with a 5.4% return, $5,839 with a 10.3% return and $21,229 with an 18.5% return.
If these returns remained consistent over time and the account holders didn’t make any withdrawals, the money would continue to compound. The low-return prediction of 5.4% would yield $6,301 at age 35 and $23,466 at 60. The medium return of 10.3% would amount to $30,913 at 35 and $358,534 at 60.
Finally, if the account maintained a consistent high rate of return of 18.5% over the years, the account holder would have $380,314 at 35 and $26,491,163 at 60. While the high return model is unlikely to work for 60 years, maximizing individual contributions and getting employer contributions each year can drastically increase the overall value of the account.
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This article originally appeared on GOBankingRates.com: What the $1K in a Trump Account for Your Kid Could Grow To If You Don’t Invest Anything Else
