Trump Accounts & Gift Tax: What the IRS Says

Ever since the One Big Beautiful Bill Act (OBBBA) passed and the newly established “Trump Accounts” for minors were introduced, both industry professionals and high income have questioned the gift tax implications of funding them.

• Is the contribution a gift?
• If so, does it qualify for the annual exclusion, or is it a gift of a future interest?
• Do you have to file a gift tax return (Form 709)?

Thankfully, the IRS issued Rev. Proc. 2026-25 on June 29, 2026, providing taxpayers with much-needed clarity on the tax treatment of these contributions.

The Background: A Technical Oversight

The confusion surrounding Trump Account contributions stemmed from standard federal gift tax rules.

Under IRC § 6019, a donor is exempt from filing Form 709 if their cumulative gifts to a single recipient remain under the annual exclusion threshold ($19,000 for 2026) and are not gifts of future interest (meaning the recipient can immediately enjoy the property).

Gifts that fall under this limit do not eat into the donor’s lifetime gift and estate tax exclusion amount (currently $15 million per individual in 2026). However, there was a catch.

Because Trump Account beneficiaries legally cannot receive distributions until they turn 18, contributions technically constituted a future interest in property.

Under strict tax law, future-interest gifts do not qualify for the annual exclusion and require a Form 709 filing, regardless of the amount. As is so often the case in taxation, the answer to whether you need to file was up in the air, until now.

Safe Harbor for Individual Donors

To eliminate a massive administrative burden for millions of families, Rev. Proc. 2026-25 establishes a clear safe harbor.

If the requirements are met, the IRS will treat Trump Account contributions as completed gifts that qualify for the annual exclusion, sparing you from filing a gift tax return.

To qualify for the safe harbor, the following conditions must be met:

1. Individual Giver: The donor must be an individual.
2. No Other Reportable Gifts: The donor does not otherwise have an obligation to file a Form 709 for the calendar year.
3. Under the Cumulative Cap: The total annual gifts to that specific beneficiary, including the Trump Account contribution, must not exceed the $19,000 annual exclusion limit.

Important Caveat: This is an “all-or-nothing” rule. If you are required to file a gift tax return for any other reason, the safe harbor is busted. The Trump Account contribution will automatically revert to its technical status as a future interest and must be fully disclosed on your Form 709.

The IRS Example in Action

To illustrate, the IRS provided the following scenario in the revenue procedure:

“In calendar year 2026 individual donor (Taxpayer) contributes $5,000 cash to each of three Trump accounts established for account beneficiaries A, B, and C, and makes an additional gift to C of $13,000 cash. Taxpayer makes no other gifts during the calendar year and is not required to, and does not, file a gift tax return for the calendar year for any other purpose… Under these facts, the requirements of section 4.02 of this revenue procedure are met and Taxpayer’s 2026 Trump account contributions will be treated as completed gifts to A, B, and C that are not future interests in property. If instead Taxpayer’s cash gift to C in 2026 is $14,500, the requirement… is not met because Taxpayer’s total gifts to C during calendar year 2026 exceed the annual per-donee gift tax exclusion under section 2503(b) of $19,000. Accordingly, 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.”

A Note for Married Couples

Married couples should be especially careful if they are accustomed to using gift splitting. Under the normal gift tax rules, one spouse can make a gift and, if both spouses consent on properly filed gift tax returns, the gift can be treated as made one-half by each spouse. This can effectively allow a married couple to use two annual exclusions for the same recipient.

However, that creates a procedural issue for Trump Account contributions. Rev. Proc. 2026-25 requires that, disregarding the Trump Account contributions, the donor must not otherwise be required to file, and must not otherwise file, Form 709 for the year.

Because a gift-splitting election requires gift tax return reporting, relying on gift splitting can cause the Trump Account contribution to fall outside the safe harbor.

If that happens, the Trump Account contribution must be reported on Form 709 as a gift of a future interest. A cleaner approach is for each spouse to make separate, clearly documented contributions during the year.

The total can still equal $38,000 per recipient ($19k per spouse), but remember the Trump account contributions are capped at $5k per year per recipient, so the remaining $33k would simply be a cash gift in this instance, and the total amount per donor should not exceed $19k.

The Takeaway

If you are planning to fund a Trump Account for an eligible individual this year and want to ensure you stay firmly within the safe harbor, keep these best practices in mind:

• Maintain Solid Documentation: Keep detailed, contemporaneous records of every gift made to an individual within the year. Track dates, transfer methods (cash, check, wire), amounts, and recipients.
• Look at the Big Picture: Remember that the $19,000 limit applies to the total amount given to that individual. If you contribute the maximum $5,000 allowed into a child’s Trump Account, your remaining direct gifting limit to that child for the rest of 2026 drops to $14,000.
• Coordinate with Your Tax Professional: Before writing checks or filing your annual returns, review your global gifting strategy with us to confirm you haven’t triggered a reporting requirement elsewhere that could inadvertently compromise your safe harbor status.
• If you Already File an Annual Gift Tax Return: This safe harbor won’t apply to you, and you will be required to include any Trump account contributions on your form 709.

Not sure how Trump Accounts fit into your estate or gifting strategy? Our tax advisors can help you coordinate your annual gifts, avoid unnecessary filing requirements, and ensure your plan aligns with the latest IRS guidance.

Schedule a discovery call today.