WASHINGTON (AP) — When the children of wealthy households leave the nest, they often benefit from their parents' largesse in the form of a trust fund. Less affluent peers may receive nothing at all — or even be expected to support their families when they become adults.
But what if all children, regardless of their family’s circumstances, could get a financial boost when they turn 18?
That's the idea behind “Trump Accounts,” a lesser-known provision of President Donald Trump's tax legislation. The bill, signed into law earlier this year, gives $1,000 to every newborn, so long as their parents open an account. That money is invested in the stock market by private firms, and the child can access the funds when they turn 18. The parents of older children can also open accounts, but they won't get the $1,000 bonus.
Backers say it's a way to bolster capitalism and help children from low-income households build wealth at a time when openly socialist candidates are growing more popular.
The new program gives the $1,000 bonus only to babies born during the calendar years of the Trump administration. Thanks to a historic donation announced Tuesday by billionaires Michael and Susan Dell, some children 10 and under could receive $250 in seed money if their parents open an account. That money is reserved for kids who live in ZIP codes with a median family income of $150,000 or less and who won’t get the $1,000 seed money from the Treasury.
Here's what you need to know about Trump Accounts and how to claim them.
It's new savings tool where money is invested in the stock market on behalf of a child. The child can't access the money until they turn 18 and can only use it for specific purposes, such as paying tuition, starting a business or making a down payment on a home.
After a parent opens an account, the U.S. Treasury will contribute $1,000 for newborns. Private banks and brokerages will manage the money, which must be invested in U.S. equity index funds that track the stock market and charge the accounts no more than 0.10% in annual fees.
Parents can contribute up to $2,500 annually in pretax income, much like they do for retirement accounts. Parents' employers, relatives, friends, local governments and philanthropic groups can also pitch in. Yearly contributions are capped at $5,000, but contributions from governments and charities don’t count toward that total.
To qualify for the $1,000 seed money, a baby must be a U.S. citizen, have a Social Security number and be born between Jan. 1, 2025, and Dec. 31, 2028. Any parent can open an account for a qualifying child, regardless of the parent's immigration status.
It's important to note that the child won't be able to access the money until they turn 18, except in rare circumstances, so it can't help with immediate expenses. And disbursements from the accounts will be subject to taxes.
Children born before 2025 won't qualify for the $1,000 incentive, but parents can still open accounts for them as long as they're under 18. Parents can still invest up to $2,500 pretax for those kids, and they may benefit from the Dells' donation, giving $250 to children 10 and under in certain ZIP codes.
The accounts won't be open for contributions until July 2026. But parents of eligible kids can sign up now by filling out Form 4547 from the Internal Revenue Service. As of Tuesday afternoon, that form was not yet available on the Trump Accounts website.
In May, parents who sign up will get information about how to finish opening the accounts. Beginning in July, the White House says it will have a website where parents can register for the accounts.
Backers of the accounts say they want to introduce more people to the stock market and give even children born into poverty a chance to benefit from it. They believe that giving every newborn $1,000 will help combat the rising popularity of socialism and offer more people the opportunity to build wealth. About 58% of U.S. households held stocks or bonds in 2022, according to the U.S. Securities and Exchange Commission, though the wealthiest 1% owned almost half the value of stocks in that same year.
Before Trump created the accounts, California, Connecticut and the District of Columbia were piloting “baby bonds” programs that are similar to Trump Accounts in some ways. Several other states, including Maryland, are weighing programs.
But those programs are targeted for youth growing up in poverty or foster care, plus children who lost a parent to COVID-19. Wealthier children don't benefit.
They're also managed by the state, not private investment firms.
Critics point out the accounts do little to help children in their early years, when they're most vulnerable and most likely to be in poverty. They also say the accounts do little to offset the cuts the Trump administration and congressional Republicans have made to other programs that benefit young people and their families, including food assistance and Medicaid. Republicans created the accounts in the same Trump tax bill that reduced spending for some of those programs.
And even with the contribution from the government, critics say the Trump Accounts will widen the wealth gap. Affluent families that can afford to make the maximum pretax contribution to the accounts will realize the greatest benefits. Poor families who can't afford to set aside money for the accounts will benefit the least. Assuming a 7% return, the $1,000 in seed money would grow to roughly $3,570 over 18 years.
The Associated Press’ education coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.
Michael Dell, and his wife Susan, laugh as President Donald Trump speaks during an event on "Trump Accounts" for kids in the Roosevelt Room of the White House, Tuesday, Dec. 2, 2025, in Washington. (AP Photo/Evan Vucci)
President Donald Trump speaks during an event on "Trump Accounts" for kids in the Roosevelt Room of the White House, Tuesday, Dec. 2, 2025, in Washington. From left, Speaker of the House Mike Johnson, of La., Trump, Michael Dell, and his wife Susan. (AP Photo/Evan Vucci)
Michael Dell, left, his wife Susan and President Donald Trump listen during an event on "Trump Accounts" for kids in the Roosevelt Room of the White House, Tuesday, Dec. 2, 2025, in Washington. (AP Photo/Evan Vucci)
