Treasury Proposes Pre-Tax Payroll Contributions for Trump Accounts
The U.S. Treasury Department and IRS proposed new rules in August 2026 that would allow parents to contribute to their children's Trump Accounts through pre-tax payroll deductions. Employers could also contribute up to $2,500 annually per employee on a tax-free basis, with a public comment period open through October.
The U.S. Treasury Department and IRS released proposed guidance in August 2026 that would allow pre-tax payroll contributions to Trump Accounts, the child savings vehicles created by the One Big Beautiful Bill Act of 2025.
Under the proposal, parents or guardians could contribute to a child's account directly from their paycheck before taxes, lowering their taxable income. Employers could contribute up to $2,500 annually per employee toward their dependents' accounts on a tax-free basis. Both types of contributions count toward the existing $5,000 annual limit per child.
Trump Accounts launched on July 4, 2026, as long-term, IRA-style investment vehicles for U.S. citizens under age 18. Children born between 2025 and 2028 are eligible for a $1,000 federal seed deposit. The accounts grow tax-deferred and convert to traditional IRAs at age 18, at which point withdrawals are subject to income tax.
As of late July 2026, more than seven million children had been enrolled. More than 50 companies have committed to contributing to the accounts, though an earlier poll of 350 employers found that only about 4% planned to implement such programs at the time.
Critics, including economist Darrick Hamilton, argue that pre-tax structures disproportionately benefit higher-income families because the tax savings are proportional to a parent's marginal tax rate. Some financial experts say 529 plans may offer better tax advantages depending on a family's goals.
A public comment period is open, with a hearing scheduled for October 13, 2026.
