IRS Tackles Trump Accounts: New Rules Ensure Bosses Don't Play Favorites
Published Date: 8/11/2026
Proposed Rule
Summary
The IRS is proposing new rules for employers who contribute to Trump accounts and dependent care assistance programs. These rules focus on making sure contributions are fair and don’t favor certain employees over others. Employers and employees involved should pay attention, as comments are due by September 25, 2026, and a public hearing is set for October 15, 2026.
Analyzed Economic Effects
10 provisions identified: 5 benefits, 5 costs, 0 mixed.
Up to $2,500 Tax-Free Trump Contributions
If your employer contributes to a Trump account for you or your dependent, you can exclude up to $2,500 from your gross income per employee per year. The $2,500 limit applies for 2026 and 2027 and is indexed for inflation for taxable years after 2027.
Self-Employed Individuals Are Ineligible
Self-employed individuals (for example, partners, sole proprietors, or 2-percent S corporation shareholders) do not count as ‘‘employees’’ for section 128 and therefore are not eligible to receive employer section 128 contributions under a Trump account contribution program. A self-employed person may still sponsor a program for their employees but cannot participate personally.
Dependent Care Assistance Exclusion Limits
Amounts provided under a dependent care assistance program are excludable from an employee's gross income up to $7,500 per year (or $3,750 if married filing a separate return). The program must satisfy nondiscrimination and other statutory requirements for the exclusion to apply.
Limit Applies Per Employee Across Employers
The $2,500 exclusion limit for section 128 contributions applies per employee across all employers for an employee's taxable year. Employers must ensure their plan does not contribute more than the annual limit for each employee.
Cafeteria Plan Salary Reduction Only for Dependents
A section 125 cafeteria plan may allow pre-tax salary reduction elections to fund a Trump account only when the contribution is made to a dependent's Trump account, not to the employee's own Trump account. Employers must permit prospective elections and allow employees to change or revoke elections at least monthly, provided changes are effective before the salary becomes currently available.
Contributions Limited to Growth-Period Dependents
Employer section 128 contributions may be made only to Trump accounts whose beneficiary is in the growth period, which runs from account establishment until December 31 of the calendar year the beneficiary attains age 17. Contributions to beneficiaries beyond that growth period are not permitted under the Trump account contribution program rules.
Nondiscrimination Failures Tax HCE Benefits
If a Trump account contribution program or dependent care assistance program fails the nondiscrimination rules, benefits provided to highly compensated employees (HCEs) are not excludable from income, while benefits remain excludable for employees who are not HCEs. The proposed rules clarify eligibility tests, safe harbors, and a 55-percent average benefits test for nondiscrimination.
Payroll Tax Treatment of Trump Contributions
Employer contributions that are excludable from income under section 128 are still treated as wages for FICA, FUTA, and RRTA purposes unless another exclusion applies, but those excluded amounts generally are not subject to Federal income tax withholding. This means payroll tax reporting and payment rules still apply for those contributions.
W-2 Reporting and Year-End Statement Required
Employers must furnish a written statement showing section 128 contributions made for an employee during the prior calendar year, which may be reported on the Form W-2 in box 12 using code TA. The written statement must be furnished on or before January 31 or included on the W-2 as specified.
Employers May Not Restrict Trustees
An employer cannot limit contributions under a Trump account contribution program to Trump accounts held only by particular trustee(s); contributions must be allowed to go to the beneficiary's existing Trump account regardless of trustee. This is intended to ensure employees can receive contributions to the single Trump account that exists for a beneficiary.
Personalized for You
How does this regulation affect your finances?
Personalize government policy and PRIA will tell you what this federal register document means for your household, plus every other regulation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.
Key Dates
Department and Agencies
Related Federal Register Documents
2026-11140, Federal Independent Dispute Resolution Operations
Starting soon, health plans and insurers must share clearer info when they pay or deny surprise medical bills. They’ll use special codes to explain these decisions, especially when dealing with folks they don’t have contracts with. This helps patients and providers understand bills better and speeds up fixing disputes, with no extra costs for most people.
2025-18278, Occupations That Customarily and Regularly Received Tips; Definition of Qualified Tips
If you earn tips at work, these new rules show which jobs count as tip-earning and explain what counts as 'qualified tips' for tax deductions. The changes apply to tips received up to December 31, 2024, helping workers and employers know exactly what tips can lower their taxes. Get ready to keep better track of your tips and maybe save some money when tax time rolls around!
2025-02251, Administrative Requirements for an Election To Exclude Applicable Unincorporated Organizations From the Application of Subchapter K; Hearing Cancellation
If you run an unincorporated organization, new rules are coming to help you skip some tricky partnership tax laws. These changes explain how to make that election properly, so you don’t get caught in confusing tax stuff. No extra fees or deadlines yet, but keep an eye out for updates to stay ahead!
2026-16405, Agency Information Collection Activities: Comment Request on the Burden Related to Foreign Status and U.S. Withholding Certifications
In accordance with the Paperwork Reduction Act of 1995, the IRS is inviting comments on the information collection request outlined in this notice.
2026-16397, Agency Information Collection Activities: Comment Request on the Burden Related to the Application for Determination for Employee Benefit Plan
In accordance with the Paperwork Reduction Act of 1995, the IRS is inviting comments on the information collection request outlined in this notice.
2026-16262, Agency Information Collection Activities; Comment Request on U.S. Business Income Tax Returns and Related Forms, Schedules, Attachments, and Published Guidance
In accordance with the Paperwork Reduction Act of 1995, the IRS is inviting comments on the information collection request outlined in this notice.
Previous / Next Documents
Previous: 2026-16296, Substances Generally Recognized as Safe
The Food and Drug Administration (FDA or we) is proposing to require the submission of generally recognized as safe (GRAS) notices for the use of a human or animal food substance purported to be GRAS under the conditions of its intended use under the Federal Food, Drug, and Cosmetic Act (FD&C Act).
Next: 2026-16317, Television Broadcasting Services St. George, Utah
This document proposes to amend the Table of TV Allotments (Table) of the Federal Communications Commission's (Commission) rules in response to a petition for rulemaking filed by KUTV Licensee, LLC (Licensee), the Licensee of full service television station KMYU(TV) (KMYU or Station), St. George, Utah (St. George). The Licensee applied for a construction permit (CP) to construct a facility on UHF channel 21 at St. George, which remains pending, and now requests that the Bureau substitute VHF channel 9 for UHF channel 21 in the Table with technical parameters set forth in KMYU's current license. The Media Bureau previously granted a petition for rulemaking submitted by the Licensee to substitute UHF channel 21 for VHF channel 9 at St. George. The Licensee later filed an application for a CP for its new channel, however, under further consideration and restraints, wishes to abandon its plans to modify its license for KMYU to operate on channel 21, and proposes to continue to operate on VHF channel 9 and specify the technical parameters of its currently licensed VHF channel 9 facility. The substitution of VHF channel 9 for UHF channel 21 in the Table will allow the Station to remain on the air and continue to provide service to viewers within its service area. Given that the Licensee proposes to utilize its currently licensed parameters, we believe VHF channel 9 can be substituted for UHF channel 21 at St. George as proposed, in compliance with the principal community coverage requirements of Sec. 73.618(a) of the Commission's rules.