A pilot program buried in the GOP’s One Big Bill would automatically create a “MAGA” account—short for “Money for Growth and Progress Account”—for every American child born between early 2025 and late 2028. Each account would start with a $1,000 government deposit. Parents could open the account at any bank of their choice before the child turns eight. If they do not, the government would set one up and notify them.
Contribution Limits and Investment Rules
After the initial $1,000, families could deposit up to $5,000 per year. The funds must be invested in a broad stock index and would grow tax-free. Withdrawals of investment gains would face long-term capital gains tax unless used for approved purposes: higher education, job training, a small business launch, or a first-home down payment.
Withdrawal Restrictions and Tax Treatment
Children could access up to half of their account balance at age 18. The remaining balance would become available at age 25. By age 31, any remaining funds would be paid out automatically. Withdrawals for non-approved uses would be taxed as ordinary income rather than long-term gains.
Comparison with 529 Plans and Roth IRAs
Unlike 529 college-savings plans and Roth IRAs, MAGA accounts do not allow completely tax-free withdrawals. 529 plans and Roth IRAs both let investors withdraw contributions and gains tax-free when used for qualified expenses (education or retirement, respectively). MAGA accounts offer fewer tax advantages and come with more complex rules.
Financial Advisors’ Concerns
Many financial advisors warn that, beyond the $1,000 grant, most families would be better off using existing tax-advantaged vehicles.
Ann Reilley, CEO of Alpha Financial Advisors: “It’s not very attractive. They seem to be complicating things for no reason.”
Zach Teutsch, managing partner of Values Added Financial: Families must be “very certain” a child will not attend college before choosing a MAGA account over a 529 plan.
Political Origins and Rationale
The MAGA account idea traces to Texas Senator Ted Cruz, who calls them Invest in America Accounts. Cruz argues they will introduce more Americans to stock ownership and free-market principles. The MAGA name nods to former President Trump’s slogan, although it officially stands for “Money for Growth and Progress.”
Estimated Cost and Legislative Outlook
The Joint Committee on Taxation estimates the program would cost about $17 billion over 10 years—a small share of the GOP’s larger tax package. Critics say the heavy restrictions built into the proposal will limit its usefulness.
Alan Cole, senior economist at the Tax Foundation: “Thank the government for the free money, but I care more about how useful it is. It’s actually the sixth or seventh best tax-free savings account option.”
With the bill stalled in the House, MAGA accounts remain a proposal rather than law. Debate continues over whether the new accounts will help families save or simply add complexity to the tax code.
