Congressional Republicans have introduced a sweeping tax proposal backed by Donald Trump that includes the creation of MAGA accounts—tax-advantaged savings plans for children designed to promote long-term financial growth. The proposal, part of a broader legislative package called “THE ONE, BIG, BEAUTIFUL BILL,” passed a key House committee following a lengthy session earlier this week.
The MAGA accounts, short for Money Account for Growth and Advancement, would provide a one-time $1,000 federal credit per qualifying child. This contribution would go directly into an investment account that grows tax-deferred and becomes accessible when the child reaches age 18. The plan mirrors some features of retirement and education savings accounts but introduces specific conditions for eligibility and usage.
Eligibility Tied to Citizenship and Social Security Status
According to the bill, to qualify for the $1,000 MAGA account credit, a child must be a U.S. citizen at birth, and the taxpayer claiming the child must possess a valid Social Security Number (SSN). If the taxpayer is married, the spouse must also have an SSN. These requirements are in line with the “America First” principle, which restricts eligibility for certain federal benefits to U.S.-born citizens and lawful residents authorized to work in the country.
Critics have pointed out that these conditions will significantly limit the number of eligible beneficiaries, excluding children of undocumented immigrants and many non-citizens. The Social Security Administration has clarified that while SSNs are necessary for work and most federal benefits, some services can still be accessed without one. Nonetheless, the MAGA account structure relies on SSN-based verification.
The $1,000 "MAGA" accounts just proposed for the "big, beautiful bill" are one of the best ideas yet in the Trump administration.
— Charlie Kirk (@charliekirk11) May 13, 2025
To remain stable, America needs to be a nation of owners who have a stake in the country. When people have nothing and own nothing, they're far more… pic.twitter.com/Wv4mhNqkMG
$5,000 Yearly Contributions Allowed but Criticized by Experts
Beyond the initial federal deposit, families would be able to contribute up to $5,000 per year to their child’s MAGA account. These contributions would be made with after-tax dollars and allowed to grow until the child turns 18, at which point the funds could be used for qualified life expenses such as education or a first home purchase. Withdrawals would be subject to capital gains taxes, and penalties would apply for early or unqualified use.
Will McBride, chief economist at the Tax Foundation, questioned the policy’s impact, calling the $1,000 “a drop in the bucket” compared to the actual cost of raising a child in the United States. He also warned that the complexity of navigating tax-advantaged savings accounts could deter widespread use. “There’s a 10 percent penalty if you withdraw at the wrong time under the wrong conditions,” he noted, adding that many Americans already struggle to manage existing tax benefits.
Business Community Weighs in on Employer Contributions
Some business leaders, including Altimeter Capital CEO Brad Gerstner, have suggested that large companies should contribute to their employees’ children’s accounts, likening the concept to 401(k) matching programs. Gerstner stated that the policy could help 3.7 million newborns annually, representing a total cost of $3.7 billion—less than many military expenditures.
Senator Ted Cruz, who helped shape the policy and spoke to executives at the Milken Ideas Conference, argued that the MAGA accounts represent a way to give every child in the U.S. “a stake in the American free enterprise system.” He described the program as a powerful tool for long-term investment and economic participation.
Divided Political Response and Next Legislative Steps
Reactions to the proposal have varied. President Donald Trump expressed strong support for the bill on Truth Social, describing it as “GREAT” and promising further collaboration on outstanding legislative issues. Senate Minority Leader Dick Durbin, commenting to Semafor, gave a more restrained assessment, saying, “Even a stopped watch is right twice a day.”
Douglas Holtz-Eakin, president of the American Action Forum, said that while the SSN restrictions would reduce program participation and cost, the accounts are not highly competitive compared to existing options like Roth IRAs, which offer tax-free growth and withdrawals. He doubted that MAGA accounts would become a primary savings vehicle for most families. As the Memorial Day deadline set by Speaker Mike Johnson approaches, other House committees are expected to take up additional components of the bill.
