New data is challenging claims that Trump Accounts would primarily benefit the ultra-wealthy. The Treasury Department revealed that 86% of families who opened Trump Accounts, tax-advantaged investment accounts for children, earned less than $200,000 a year.
Critics of the program, including Rep. Ayanna Pressley (D-MA), claimed that Trump Accounts “would do nothing to close the growing wealth gap in America” and argued that Congress should instead pass “Baby Bonds,” which would accrue at a targeted 3% return rate.
Trump Accounts take a different approach. While Baby Bonds put a $1,000 seed investment into a government bond, Trump Accounts place a $1,000 seed investment into a low-cost index fund similar to those that track the S&P 500. Unlike Baby Bonds, the accounts give young Americans direct equity exposure. Once beneficiaries reach adulthood, the accounts can be rolled into retirement savings vehicles, allowing gains to continue compounding over time. Assuming long-term market performance keeps pace with its average return of 7.5%, Trump Accounts could provide stronger protection against inflation.
The income distribution among Trump Account holders mirrors broader Treasury Department findings on Trump’s tax agenda. According to the data, the benefits of several key tax provisions flowed primarily to low- and middle-income households. 90% of taxpayers claiming the No Tax On Tips deduction earned less than $100,000, while similar trends held for the No Tax On Overtime deduction, the enhanced senior deduction, the deduction for car loan interest, and the enhanced child tax credit.
“American families and workers overwhelmingly benefited from the Working Families Tax Cuts, receiving the largest share of the historic tax relief delivered this past filing season,” said Treasury Secretary Scott Bessent.
In total, American families and workers claimed $82 billion in relief directly from the Working Families Tax Cuts, with 97% of filers receiving a tax cut. Filers who claimed the No Tax On Tips deduction received an average deduction of more than $7,000, while those claiming the No Tax On Overtime received an average deduction of more than $3,100. Seniors reported an average deduction of $7,500.
Beyond the Working Families Tax Cuts provisions, the legislation also preserved the 2017 Trump tax cuts, preventing many of the individual tax reductions enacted during Trump’s first term from expiring and increasing taxes on millions of households. However, since cuts were already in place, the administration often refers to the legislation as a tax extension rather than a new tax cut.
