Children's Tax Advantage Account (Child Tax Account) Explained

If you have been searching for "Children's Tax Advantage Account," "child tax account," or "Invest America account" — you have found the right place. Children's Tax Advantage Account is the official IRS term for what most people call a Trump Account. Same program. Same rules. Same $1,000 deposit. The IRS uses the formal name on official documents, but the media and public use "Trump Account." This guide explains everything under the official name.

What Is a Children's Tax Advantage Account?

A Children's Tax Advantage Account is a federally created investment account for U.S. citizen children under age 18. It was established by the One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, under IRC Section 530A.

The IRS issued guidance in Notice 2025-68 (published 2025-12-03) and created IRS Form 4547 for parents to elect the account. The official portal at trumpaccounts.gov is expected to launch mid-2026.

In plain English: the government created an investment account for every American child. For babies born 2025–2028, the government puts in $1,000. The money goes into S&P 500 index funds and grows until the child turns 18. Then it becomes a traditional IRA that the child fully controls.

Why Two Names? "Children's Tax Advantage Account" vs "Trump Account"

The name confusion is common. Here is the breakdown:

• Children's Tax Advantage Account — the formal name used by the IRS on official forms, notices, and guidance documents.
• Trump Account — the popular name used in media, by politicians, and by the general public. Named after President Trump who signed the law.
• Section 530A Account — the technical legal name referencing the specific tax code section.
• MAGA Account — an earlier name used during the legislative process, no longer commonly used.
• Invest America Account — the original name from Ted Cruz's proposal. Still searched, but replaced by "Trump Account" in the final law.
• Child Tax Account — a common shorthand people search for, though not an official name.

All of these names refer to the exact same program. There is no difference in rules, benefits, or eligibility between a "Children's Tax Advantage Account" and a "Trump Account." The IRS does not care which name you use when talking about it — they only care that you file IRS Form 4547.

What Are the Tax Advantages?

The "tax advantage" in the name refers to three specific benefits:

The trade-off: when the child withdraws money after age 18 (once it becomes a traditional IRA), withdrawals are taxed as ordinary income. This is the same treatment as a traditional IRA. For more on the tax details, see our gains taxation guide.

Who Is Eligible?

Every U.S. citizen child under 18 is eligible. There are no income restrictions. The three requirements:

• U.S. citizen — born in the U.S. or a U.S. citizen at birth
• Valid Social Security Number
• Under age 18 at the end of the election year

The $1,000 government deposit is only for children born between January 1, 2025 and December 31, 2028. Children born outside that window can still open a Children's Tax Advantage Account — they just do not receive the deposit. Use our Eligibility Checker to confirm.

Contribution Limits

The annual contribution limit is $5,000 from all sources combined (after-tax). This includes contributions from parents, grandparents, relatives, and friends. The $1,000 government deposit does not count toward this cap.

Employers can contribute up to $2,500/year per employee, tax-free under IRC Section 128. The employer contribution does count toward the $5,000 annual cap.

The contribution limit is indexed for inflation starting in 2027. For more, see our contribution limits guide.

How to Open a Children's Tax Advantage Account

There are three ways to open the account (elect the Children's Tax Advantage Account):

1. With your tax return — attach IRS Form 4547 to your 2025 federal tax return, due April 15, 2026.
2. Through trumpaccounts.gov — the online portal is expected to launch mid-2026.
3. By mail — send a completed IRS Form 4547 to the IRS.

For the complete walkthrough, see how to open a Trump Account step by step.

How the Money Is Invested

All funds in a Children's Tax Advantage Account must be invested in mutual funds or ETFs that track the S&P 500 or a broad U.S. equity index. The fund expense ratio must be at or below 0.1%.

You cannot invest in individual stocks, bonds, crypto, or other assets. The investment options are intentionally limited to broad, low-cost index funds that track the U.S. stock market. For eligible fund options, see our index fund requirements guide.

What Happens at Age 18?

At age 18, the Children's Tax Advantage Account automatically converts to a traditional IRA. The child gains full control and can:

• Keep it invested for retirement
• Withdraw for any purpose — college, a home, a business, or anything else
• Convert to a Roth IRA — pay taxes now at a likely low rate, then enjoy tax-free growth

There are no restrictions on how the money is used after 18. Standard IRA rules apply. For more details, see what Trump Account money can be used for.

Children's Tax Advantage Account vs Other Accounts

For detailed comparisons, see Trump Account vs 529 or Trump Account vs custodial accounts.