The Treasury Department and Internal Revenue Service (IRS) have issued new guidance that removes a significant administrative hurdle for families contributing to Trump Accounts. Revenue Procedure 2026-25 establishes a safe harbor that allows many taxpayers to make qualifying contributions without filing a federal gift tax return.
While the guidance does not change the contribution limits or the tax treatment of Trump Accounts, it eliminates unnecessary paperwork for many donors. For parents, grandparents and other family members looking to help children build long-term savings, that is welcome news.
Understanding Trump Accounts
Established under the Working Families Tax Cuts Act, Trump Accounts are tax-advantaged savings accounts created for children under age 18. During the account’s growth period, withdrawals are generally prohibited, allowing investments to remain in the account until the beneficiary reaches adulthood, except in limited circumstances defined by law. Contributions may come from family members, employers, nonprofit organizations and certain governmental entities, subject to annual contribution limits and other program rules.
Why the New Guidance Was Needed
Gift tax rules generally distinguish between gifts of a present interest and gifts of a future interest. Because beneficiaries typically cannot access funds in a Trump Account until they reach adulthood, questions arose about whether contributions should be treated as gifts of a future interest. If so, donors could have been required to file Form 709, the federal gift tax return, even when no gift tax was actually due.
Recognizing that millions of families could face unnecessary filing requirements, the Treasury Department and IRS created a safe harbor that treats qualifying Trump Account contributions as completed gifts eligible for the annual gift tax exclusion. As a result, many donors can avoid filing a gift tax return solely because they contributed to a Trump Account. The agencies noted that nearly six million Trump Account elections had already been received, making simplified reporting an important administrative improvement.
Who Qualifies for the Safe Harbor?
To qualify for the safe harbor, several requirements must be met:
- The donor must be an individual.
- Contributions must be made in cash, by check, money order or electronic funds transfer.
- Total gifts to each beneficiary—including Trump Account contributions—cannot exceed the annual gift tax exclusion amount, which is $19,000 for 2026.
- The contributions cannot create gift tax or generation-skipping transfer (GST) tax liability.
- The donor cannot otherwise be required to file a federal gift tax return for that tax year.
If all of these conditions are satisfied, the contribution qualifies for the safe harbor and generally does not have to be reported on Form 709.
When a Gift Tax Return May Still Be Required
The safe harbor is not available in every situation.
For example, if you contribute $5,000 to a child’s Trump Account and later make additional gifts that cause your total annual gifts to that child to exceed the $19,000 annual exclusion, the safe harbor no longer applies. In that case, you generally must file a gift tax return reporting all gifts made during the year, including the Trump Account contribution. Likewise, taxpayers already required to file Form 709 for estate planning, GST or other gift tax purposes cannot rely on the simplified reporting rules.
What This Means for You
The new safe harbor makes it easier for families to contribute to Trump Accounts without worrying about unexpected gift tax reporting requirements. If your contributions fall within the annual exclusion limits and you are not otherwise required to file a gift tax return, you may be able to avoid additional IRS paperwork altogether.
However, families making larger gifts, contributing to multiple beneficiaries or implementing broader estate planning strategies should not assume the safe harbor automatically applies. Your overall gifting strategy—not just your Trump Account contributions—determines whether additional reporting is required.
Information on how you can establish a Trump Account for your child(ren) is available at Trump Accounts – The American Dream Starts Now.
Stephano Insights
The new guidance is designed to reduce administrative burdens, but it should not replace thoughtful tax planning. Annual gifting decisions often affect broader estate, wealth transfer and succession planning goals. Before making significant contributions to Trump Accounts or other gifting vehicles, review your overall strategy with your tax advisor to confirm you remain within annual exclusion limits and avoid unintended filing requirements.
At Stephano Slack, we help clients evaluate gifting strategies in the context of their complete financial picture. Whether you are planning for children, grandchildren or future generations, proactive tax planning can help you take advantage of available opportunities while remaining compliant with evolving IRS guidance.
Author Coleman Clark is a Tax Senior specializing in strategies for high-net-worth individuals and driving business growth. He focuses on providing personalized solutions to help clients achieve their financial goals. He can be contacted at 610-687-1600 or cclark@stephanoslack.com.
Disclaimer: This content is for informational purposes only and doesn’t constitute professional advice.
Recent Comments