Trump Accounts: What Small-Business Owners Should Know About the New Employee Benefit

What Are Trump Accounts?

Trump Accounts are a new type of tax-advantaged investment account established for eligible children under age 18.

On October 1, 2026, the U.S. Treasury Department announced that automatic enrollment had been completed for eligible children with valid Social Security numbers. Parents or guardians must still claim their child's account to manage it and enable contributions.

The federal government also provides a one-time $1,000 contribution for qualifying U.S. citizen children born between January 1, 2025, and December 31, 2028. Families must claim the account and make the required election to receive that contribution.

While much of the attention has focused on families, the program also introduces an employee benefit option for businesses.

Can Small Businesses Contribute to Employees' Trump Accounts?

Yes. Employers can voluntarily contribute up to $2,500 per year per employee to eligible Trump Accounts through a qualifying employer contribution program.

These contributions can be directed to an eligible employee's account or the accounts of their qualifying dependents.

For example, a small business could establish a program that contributes $500 annually toward an eligible employee's child's Trump Account. The employer could also choose a different contribution amount, provided the program complies with applicable limits and requirements.

The $2,500 limit applies per employee, not per child. An employee with multiple eligible children does not automatically receive a separate $2,500 limit for each child. Employers are not required to offer this benefit. Participation is entirely voluntary.

Are Employer Contributions Tax-Deductible?

Generally, yes. Qualifying employer contributions are deductible business expenses and can be excluded from the employee's federal taxable income, subject to applicable requirements.

This creates a potential benefit for both parties:

• For employers: Contributions may qualify for a business tax deduction while providing an additional employee benefit.
• For employees: Qualifying contributions can help fund their children's accounts without increasing their federal taxable income.

However, there's an important distinction. Although qualifying contributions are excluded from federal income tax, they are generally still subject to applicable Social Security, Medicare, and federal unemployment taxes. Employer contributions also count toward the general $5,000 annual Trump Account contribution limit. The government's qualifying $1,000 initial contribution does not count toward that limit.

What Must a Business Do to Offer This Benefit?

Businesses cannot simply designate an informal payment as a tax-free Trump Account contribution.

To receive the intended tax treatment, employer contributions must be made through a qualifying written program under Section 128 of the Internal Revenue Code.

The IRS issued proposed regulations in August 2026 outlining requirements that include:

• Establishing a separate written employer contribution program.
• Identifying which employees are eligible to participate.
• Following applicable nondiscrimination rules.
• Maintaining appropriate contribution records and employee notices.
• Meeting applicable payroll reporting and administrative requirements.

Because the detailed regulations are still proposed, businesses should review current IRS guidance before establishing a program.

Can Business Owners Contribute to Their Own Children's Accounts?

Business owners can contribute personally to eligible children's Trump Accounts, subject to applicable contribution limits. However, personal contributions and tax-favored employer contributions are not necessarily treated the same way.

Special restrictions can apply to sole proprietors, partners, and certain S corporation shareholders seeking to receive the employer contribution benefit themselves. A business owner's eligibility depends on the business structure and the applicable tax rules. Owners should not assume that contributions made through their businesses will receive the same treatment as contributions for eligible employees.

Should Small Businesses Consider Offering Trump Account Contributions?

For businesses evaluating employee benefits, Trump Accounts introduce another option worth understanding.

A contribution program could help employers support employees with children while potentially providing a deductible business expense. However, business owners should consider the cost, employee eligibility, administrative requirements, and payroll implications before making a decision.

The benefit may be more practical for some businesses than others, particularly depending on the size of the workforce and the number of employees with eligible dependents.

What Should Business Owners Do Next?

Trump Accounts are still a relatively new program, and additional IRS guidance may affect how employers establish and administer contributions.

Before offering the benefit, business owners should understand:

• How employer contributions would affect business expenses and tax deductions.
• Whether their business structure creates special limitations.
• What payroll reporting and administrative responsibilities would apply.
• How the benefit fits within their existing employee compensation and benefits budget.

Barklee Financial Group helps small-business owners understand tax obligations and evaluate the tax implications of business decisions. If you're considering adding Trump Account contributions as an employee benefit, reviewing the tax and payroll requirements is a good place to start. For information about eligibility, claiming accounts, and the federal contribution program, visit TrumpAccounts.gov.