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PA Will Tax Your Kids Trump Accounts
Did you know that under current state income tax law, Pennsylvania will tax the earnings of your child's Trump Account each year?
Trump Accounts (officially 530A accounts) are a new type of tax-advantaged investment account for U.S. citizens under age 18, established by the One Big Beautiful Bill Act of 2025. They are designed to jumpstart lifelong savings during the early gap years and are tailored for minors (i.e., Starter IRA's).
Who can contribute to Trump Accounts, ages 17 and under?
- Individuals: Parents, grandparents, other relatives, friends, and the child (beneficiary) themselves up to $5000 annually.
- Government Seed: Children born in 2025 through 2028 are eligible for a one-time $1,000 federal deposit, which does not count toward the annual $5,000 limit.
- Employers: Can contribute up to $2,500 per year per employee’s child which counts towards the $5000 limit.
- Charitable Organizations: Organizations like the Michael & Susan Dell Foundation have pledged one-time gifts (e.g., $250) for eligible children in certain ZIP codes, which also do not count toward the annual $5000 limit.
Under Federal tax law, investments in Trump Accounts grow tax-deferred. However, current Pennsylvania tax law will require minors (ages 17 and younger) with Trump Accounts to pay PA personal income tax on the growth for that year. Withdrawals from Trump Accounts are not permitted until January 1 of the year in which the child turns 18. Not to mention the burden will be on the person who set up the Trump Account (e.g., parents; grandparents) to file a PA personal income tax return each year on behalf of the child.
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Pennsylvania Treasurer Garrity's office confirmed the gap between federal and Pennsylvania state income tax laws for Trump Accounts. Language exists for other programs (e.g., 529 Plans) that can easily be adapted to Trump Accounts but the Pennsylvania Treasury Department doesn't write the laws.
Time is of the essence as new Trump Accounts go live in July 2026. Contacting your State representatives and Gov. Shapiro may help spark a call to action in Harrisburg to change Pennsylvania's unfair and burdensome tax treatment of Trump Accounts.
