The Congress of EEUU is considering the approval of a proposal called “On Big Beautiful Bill”. Under the name the “Trump Accounts”, the proposal aims to give all babies born between 2025 and 2029 a savings account opened by the US Treasury, with an initial capital of $1,000, in order to reduce the wage gap. It is a financial education tool, through which the beneficiaries will be able to use this money solely for educational purposes.
One Big Beautiful Bill
The initiative aims to provide a $1,000 savings account for newborns born between January 1, 2025 and January 1, 2029. They seek to close the pay gap that surrounds child education, giving them the ability to save from the beginning of their lives, with an account in which their family and friends can deposit when and how much they want. They have been named “Trumps Accounts”, and it would be the US Treasury that would activate them, and whose funds would be invested in diversified funds of US stock indices, in order to increase them.
Trump accounts, who is eligible?
There are three requirements for access to one of these accounts, although we must remember that this proposal has not yet been adopted. First, the baby must be born on US soil between Jan 1, 2025 and January 1, 2029. Another requirement is to have a valid US Social Security Number attesting to your nationality.
Finally, at least one of the parents must have a valid Social Security Number so that it can be properly traced. Once the $1.00 has been deposited by the US Treasury, both parents and family members will be able to contribute amounts to the account, with up to $5,000 per year. The objective of these accounts is to invest in financial education and the education of new generations.
What can the money be used for?
The Trump Accounts has a definite purpose. They do not consist of accounts for young people to have their own money and spend it on what they think is appropriate, but in a bet on their professional and personal future. The purposes for which these accounts are intended are the entry of the first house, to be able to meet the payment of higher education and/or vocational training, even to undertake. The aim is to provide young people with savings from an early age so that they can use them in the future, thus bridging this economic gap.
When will the money be made available?
The balance available in the accounts will only be available when the beneficiary reaches the age of 18, and can access only 50% of it. The full amount will not be available until they reach the age of 30. As long as the money is withdrawn for any of these purposes and is justified, they will have a long-term capital gains taxes, which is lower than the general income tax. If the funds are withdrawn with other purposes, they will be subject to a % tax equivalent to income taxes.
Although this measure is intended to address the financial gap between families who can help their children to pay for certain studies and those who cannot, it is nonetheless an exclusionary measure. In essence, you must be born in the US, or failing that, have a parent who can prove their nationality with a Social Security number. This excludes all persons with immigrant parents who were born in foreign territory and wish to apply for citizenship.
If the aim is to reduce this existing difference, the requirements should be extended to include those babies who in some way (by their place of birth or that of their parents), are able to access this kind of aid which is a great help in terms of educational costs.
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