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If you have been wondering whether contributing to a child’s new “Trump account” could saddle you with a gift tax return, the IRS just delivered welcome news. In Rev. Proc. 2026-25, the Treasury Department and the IRS established a transfer tax safe harbor for individual donors who fund these accounts, treating qualifying contributions as completed gifts that are not gifts of future interests and to which the annual per-donee gift tax exclusion applies. The practical payoff: donors within the safe harbor will not have to file a gift tax return to report those contributions.
What is a Trump account?
Created by the One, Big, Beautiful Bill Act, which added section 530A to the Code, a Trump account is a form of traditional IRA established for the exclusive benefit of an eligible individual under age 18. During the “growth period” before the beneficiary turns 18, distributions are sharply restricted, and the account is generally subject to a $5,000 annual contribution limit (indexed after 2027).
Why the safe harbor matters
Because access is restricted during the growth period, there was a real question whether contributions were gifts of future interests, which do not qualify for the annual exclusion and must be reported on Form 709. The numbers explain the IRS’s motivation. Nearly six million elections to open Trump accounts had already been received as of June 4, 2026, and the IRS warned that gift tax return filings could balloon from roughly 300,000 to several million annually.
The fine print
The safe harbor is not automatic. It applies only if the donor is an individual, the only taxable gifts that year are cash contributions to Trump accounts, total gifts to each beneficiary stay within the annual exclusion ($19,000 for 2026), no gift or GST tax results, and no Form 709 is otherwise required.
Commentary
The relief reflects pragmatism over formalism. As the IRS itself acknowledged, the vast majority of donors will never owe transfer tax given the $15 million lifetime exclusion, so the compliance cost would have dwarfed any benefit. Practitioners should still counsel clients to track contributions carefully: exceed the per-donee exclusion, as the Revenue Procedure’s own example shows with a $14,500 additional gift, and the entire contribution becomes a reportable future interest. The IRS also reminds taxpayers to keep records substantiating compliance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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