Treasury Department Proposes Pre-Tax Contributions for Trump Accounts, Offering $2,500 Tax Break for Parents
The U.S. Treasury Department has issued a new proposal that could significantly enhance the benefits of Trump Accounts for working parents. This guidance would allow parents to contribute up to $2,500 annually to Trump Accounts on a pre-tax basis through payroll deductions. Additionally, the proposed rule outlines a framework for employers to make tax-free contributions of up to $2,500 per year on behalf of employees who establish Trump Accounts for their children. Trump Accounts, established by the One Big Beautiful Bill Act last year, are tax-deferred investment accounts designed for children, similar to custodial brokerage accounts and individual retirement accounts (IRAs), allowing investment earnings to grow tax-free until withdrawal. This new rule addresses previous criticisms regarding double taxation, as prior guidelines mandated after-tax contributions. The public comment period for this proposed rule is open until September 25. 
