New IRS guidance will save many parents the hassle of filing gift tax returns merely because they contribute to Trump accounts.
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Beginning July 4, taxpayers may begin making contributions to Trump accounts, the new child-focused savings vehicle created under Code section 530A as part of the One Big Beautiful Bill Act (OBBBA). Ahead of that start date, the IRS has issued guidance to answer a question for donors: Will those contributions trigger a gift tax return filing requirement?
The guidance, issued as a revenue procedure, makes clear that many individual donors will not have to file gift tax returns merely because they contribute to Trump accounts.
What Are Trump accounts?
Trump accounts are a new kind of retirement savings account created by Congress as part of OBBBA. Under OBBBA, a Trump account can be opened for an eligible individual who has not turned 18 before the close of the calendar year in which the initial account election is made. The eligible individual must have a Social Security number issued before the initial account election.
To open the account, an authorized person (such as a parent or guardian) must make an election. After the election is made, an initial Trump account can be established for the child.
The federal government will also deposit a one-time $1,000 “pilot program” contribution into the Trump account of any eligible child (with an election) who is a U.S. citizen and whose birth falls between January 1, 2025, and December 31, 2028. This $1,000 will not count against any contribution limits.
The funds in Trump accounts are subject to investment restrictions, including that eligible investments be low-cost mutual funds or exchange-traded funds (ETFs) that track U.S. stock indexes, carry no leverage, and have annual fees no greater than 0.1%.
What Does This Have To Do With Gift Tax?
Under current law, a gift tax return is generally required when an individual makes gifts during the year that exceed the annual exclusion amount, or when the gift is not eligible for the annual exclusion, such as a gift of a future interest. That gets reported on Form 709, generally due April 15 of the year after the gift is made.
During the account’s growth period—generally the period before January 1 of the calendar year in which the beneficiary turns 18—Trump accounts are tightly restricted. The exceptions are narrow and include qualified rollover contributions, certain ABLE rollovers during the year the beneficiary turns 17, distributions of excess contributions, and distributions upon the beneficiary’s death. But hardship withdrawals are not permitted, and you can’t simply close the account and distribute it because your circumstances have changed.
That matters because the annual gift tax exclusion ($19,000 for 2026) only applies to gifts that are not future interests, meaning the recipient must have a present right to use, possess, or enjoy the gift now, not later.
Without guidance, parents and other donors could have been responsible for filing gift tax returns even for relatively modest contributions, simply because the contribution could be characterized as a future-interest gift.
Why Do Treasury And The IRS Care?
Most individual donors are unlikely ever to owe gift tax. That’s because, despite the annual exclusion (the amount that you can give away every year not subject to tax), the federal gift tax and estate tax use the same exemption amount—for 2026, that’s $15 million. Gifts made during life simply chip away at that exemption, and whatever remains is used by the estate at death. That means you generally would not owe federal gift or estate tax unless your taxable lifetime gifts and taxable estate exceed that exemption.
But, as with income tax, what might be subject to reporting is different than what might be taxable. And if donors were required to file a gift tax return for Trump account contributions, that would dramatically increase the number of forms filed with the IRS.
How much? The IRS says that, as of June 4, 2026, nearly six million elections to open Trump accounts had been received. Last year, according to the IRS Data Book, the IRS received just 311,332 gift tax returns. That expected bump would be an administrative nightmare, especially when most of those returns would not produce gift tax.
What Does The Guidance Do?
If a donor meet the IRS’s new safe harbor rules, the contributions will be treated as completed gifts that are not future interests and are eligible for the annual gift tax exclusion for gift tax, generation-skipping tax (GST), and gift tax reporting purposes.
That means the donor does not have to file a gift tax return just because of those Trump account contributions.
Who Qualifies For The Safe Harbor?
The safe harbor applies if the following requirements are met for the calendar year:
- The donor must be an individual.
- The donor’s only taxable gifts for the year must be cash contributions—cash, check, money order, or electronic funds transfer—to one or more Trump accounts, and each contribution must be made before the calendar year in which the beneficiary turns 18.
- The donor’s total gifts to each beneficiary for the year, including the Trump account contribution, must not exceed the annual exclusion amount ($19,000 for 2026).
- The contributions also must not create gift or GST tax liability after applying the donor’s remaining applicable credit amount or GST exemption.
If the donor is otherwise required to file a gift tax return—or files one for another reason—the safe harbor does not apply.
Examples Of How This Works
The guidance offers an example. Assume that a taxpayer contributes $5,000 to each of three Trump accounts for A, B, and C, and also gives C another $13,000 in cash. Because the total gifts to each beneficiary are within the 2026 annual exclusion amount of $19,000, the safe harbor applies.
But if the additional cash gift to C were $14,500, the total gifts to C would be $19,500, which would exceed the annual exclusion. In that case, the taxpayer must file a gift tax return reporting all 2026 gifts and must report the Trump account contributions as gifts of future interests.
Wait, Can You Explain That Last Part Again?
That last part is where the guidance gets tricky. As currently written, “If each of the requirements… is met for a calendar year in which a taxpayer makes contributions to one or more Trump accounts, each Trump account contribution made by the taxpayer during that calendar year will be treated as a completed gift to the account beneficiary that is not a future interest in property and to which the annual exclusion applies for purposes of gift tax, GST tax and gift tax reporting.” [emphasis added]
The example goes on to make clear that if the safe harbor is not met for any of the contributions, “Taxpayer must file a gift tax return for calendar year 2026 reporting all 2026 gifts, and must report the Trump account contributions to A, B, and C as gifts of future interests.” [emphasis added]
In other words, it doesn’t matter that the other gifts are under the exclusion amount. That means this is not a blanket rule that all Trump account contributions are always annual exclusion gifts. If a donor does not meet those conditions—for example, because they made other reportable gifts, exceeded the annual exclusion for a beneficiary, or filed Form 709 for another purpose—you may need to file a gift tax return.
Contribution Limits
The dollar amounts in the examples aren’t random: Trump accounts come with a $5,000 annual contribution limit, which will be adjusted for inflation after 2027. The $5,000 cap includes contributions made by employers under a special employer program and by individuals, such as parents or grandparents.
Employer contributions, which are included in the $5,000 cap, can’t exceed $2,500 per year, adjusted for inflation, and are excluded from taxable income.
Other contributions fall outside the $5,000 cap. These include the $1,000 pilot program contribution, qualified general contributions made by governments or charities, and certain rollover contributions. Those amounts do not reduce the $5,000 annual limit available for family or employer contributions.
Some contributions, including the federal pilot contribution, qualified general contributions, and employer contributions, do not create basis in a Trump account. By contrast, contributions made by parents, grandparents, or others with after-tax dollars do create basis. You can think of basis as your cost. In this context, basis generally reflects money that has already been taxed, such as after-tax contributions from parents or grandparents, and should not be taxed again when distributed.
What’s Next For Taxpayers?
Rev. Proc. 2026-25 prevents ordinary individual donors from having to file gift tax returns simply because they contributed to a Trump account. But to qualify, a donor has to stay within the annual exclusion, make only qualifying cash contributions, avoid other Form 709 triggers, and meet the other safe harbor requirements.
With Form 4547 available, parents can make the election to open a Trump account, even though contributions are not scheduled to begin until July 4. If you’re considering participating, watch for final Treasury and IRS rules—and take a look at whether it makes sense for your family. If you haven’t yet opened an account, you’ll need to make an election. Here’s how.
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