Key Takeaways
- Revenue Procedure 2026-25 creates a safe harbor for Trump Account contributions, allowing many donors to avoid Form 709 and claim the annual gift tax exclusion.
- Donors filing Form 709 for unrelated transfers lose the safe harbor. Example 6 treats identical Trump Account gifts as future interests, creating reporting uncertainty.
- Generation-skipping transfer (GST) planning requires added scrutiny. Coordinate Trump Account gifts with trusts, gift splitting and estate planning to manage tax reporting.
One of the more popular provisions of the One Big Beautiful Bill Act (OBBBA) was the creation of Trump Accounts under IRC §530A, a new tax-favored savings vehicle intended to encourage long-term investing for children. While much of the discussion has focused on establishing and funding these accounts, Revenue Procedure (Rev. Proc.) 2026-25 provides important guidance on how contributions to these accounts are treated for federal gift tax purposes.
Rev. Proc. 2026-25 creates a safe harbor that allows many donors to avoid filing Form 709 for annual Trump Account contributions. However, the guidance also raises an unexpected interpretive question. Although the safe harbor expressly treats qualifying contributions as present-interest gifts, Example 6 directs a donor who is otherwise required or elects to file Form 709 to report those same contributions as gifts of future interests. Whether this reflects a deliberate policy choice or simply the administrative limitation of the safe harbor remains unclear.
Gift Tax Basics
Federal gift tax generally applies when an individual transfers property to another person for less than full and adequate consideration. Most lifetime gifts, however, never result in actual gift tax because of the exclusions and exemptions available under the federal gift tax rules.
Each individual may give up to the annual exclusion amount ($19,000 per recipient in 2026) to any number of recipients each year without using any portion of his or her lifetime gift and estate tax exemption or filing a gift tax return in many situations. Gifts exceeding the annual exclusion generally reduce the donor’s remaining lifetime exemption, currently $15 million in 2026, before any gift tax is actually due.
The annual exclusion, however, is available only for gifts of present interests in property. Under IRC §2503(b), a present interest is one in which the donee has the immediate right to possess, use, or enjoy the transferred property. By contrast, gifts of future interests do not qualify for the annual exclusion and typically must be reported on Form 709, regardless of amount.
The Future Interest Problem
Because assets in a Trump Account generally cannot be accessed until the beneficiary reaches age 18, practitioners questioned whether contributions to these accounts constituted gifts of future interests.
This concern surrounding Trump Accounts is somewhat unique because Congress has previously provided specific exceptions for several other forms of gifts to minors, including §529 plans, Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) accounts, Achieving a Better Life Experience (ABLE) accounts and Crummey withdrawal powers. Although many of these arrangements similarly delay a child’s unrestricted access to these assets, statutory or regulatory authority permits these account transfers to qualify as present-interest gifts for annual exclusion purposes. IRC §530A, however, contains no comparable gift tax provision.
Without additional guidance, even a modest contribution to a Trump Account could require the filing of a gift tax return. The IRS noted that nearly six million Trump Accounts have already been established and estimated that annual gift tax filings could increase from roughly 300,000 returns to several million if every contribution required reporting.
Recognizing the administrative burden this would create, Rev. Proc. 2026-25 establishes a safe harbor under which qualifying contributions to Trump Accounts are treated as completed gifts that are not gifts of future interests, allowing the annual exclusion to apply without requiring Form 709.
The IRS Safe Harbor
The safe harbor applies for a calendar year if all of the following requirements are satisfied:
- the donor is an individual;
- the donor’s only taxable gifts during the calendar year are cash contributions to one or more Trump Accounts, each made before the calendar year in which the beneficiary attains age 18;
- the donor’s total gifts during the calendar year to each beneficiary, including contributions to that beneficiary’s Trump Account, do not exceed the annual exclusion;
- the contributions do not generate either gift tax or GST tax after application of the donor’s remaining applicable credit amount or GST exemption; and
- disregarding the Trump Account contributions themselves, no gift tax return is required to be filed and no gift tax return is otherwise filed for that calendar year, whether for gift tax, GST tax, portability, or any other purpose.
If these requirements are satisfied, contributions to Trump Accounts are treated as:
- completed gifts;
- not gifts of future interests;
- eligible for the gift tax annual exclusion; and
- exempt from Form 709 reporting.
For most taxpayers making modest annual contributions, the guidance accomplishes exactly what Treasury intended by eliminating unnecessary gift tax reporting.
Where the Guidance Becomes Interesting
The fifth requirement limits the safe harbor to situations in which the donor is not otherwise required or electing to file Form 709. At first glance, this appears to be nothing more than an administrative limitation. A closer reading, however, suggests something more significant. The Rev. Proc. expressly provides that qualifying contributions are treated as gifts that are “not future interests.”
It does not, however, affirmatively state whether contributions falling outside the safe harbor remain present-interest gifts. Instead, Example 6 requires a donor who is otherwise required or elects to file Form 709 to report the Trump Account contributions as gifts of future interests. Traditionally, whether a gift constitutes a present or future interest is determined independently of whether Form 709 must be filed. Example 6, however, appears to tie the reporting treatment of Trump Account contributions to whether the donor is otherwise filing a gift tax return.
Example 6 illustrates the practical implications. Assume a taxpayer contributes $5,000 to each of three grandchildren’s Trump Accounts. If those are the taxpayer’s only gifts during the year, no gift tax return is required.
Now change only one fact. The taxpayer also transfers an LLC interest to an irrevocable trust for a child, requiring Form 709.
The Trump Account contributions have not changed. The beneficiaries have not changed. The dollar amounts have not changed. Yet, because Form 709 is now required for an unrelated transaction, the safe harbor is not available and Example 6 instructs the donor to report the Trump Account contributions as gifts of future interests.
Historically, whether a gift constitutes a present or future interest has depended upon the legal rights transferred to the donee, not upon whether the donor happened to make another unrelated reportable gift during the same calendar year. Example 6, therefore, raises questions that extend well beyond administrative reporting relief.
GST Considerations
The guidance also has implications for generation-skipping transfers (GSTs).
When the beneficiary is a grandchild or other skip person, a contribution to a Trump Account generally constitutes a direct skip. If the safe harbor applies, the contribution is treated as a present interest gift for gift tax purposes. Assuming the transfer also satisfies the requirements of IRC §2642(c), it generally will qualify for the GST annual exclusion and have a zero-inclusion ratio without requiring an allocation of GST exemption.
When direct skips are reported on Form 709, the reporting position reflected in Example 6 may be particularly relevant for Trump Account beneficiaries who are skip persons. If the donor is otherwise required or elects to file Form 709, practitioners should also consider the interaction with the automatic allocation rules for GST exemption. Although relatively few taxpayers will incur actual GST tax because of the current $15 million exemption amount, Trump Account contributions to skip persons should be analyzed together with the donor’s overall gift tax and GST reporting obligations.
Planning Implications and Takeaway
For most families, Rev. Proc. 2026-25 provides exactly the relief Treasury intended by preventing millions of taxpayers from filing unnecessary gift tax returns.
The analysis becomes more nuanced, however, for taxpayers engaged in broader wealth transfer planning. Once a donor is required or elects to file Form 709 for the year, the donor no longer satisfies the safe harbor’s eligibility requirements. Under Example 6, the IRS instructs donors to report the Trump Account contributions as gifts of future interests, even though the contributions themselves have not changed.
Practitioners should, therefore, coordinate Trump Account contributions with other transactions requiring Form 709, including transfers to irrevocable trusts, Crummey withdrawal powers, gifts of family business interests, gift-splitting elections, GST exemption allocations, portability elections and transfers reported for adequate disclosure.
Importantly, a donor need not exceed the annual exclusion for the Trump Account beneficiary in order for the safe harbor to become unavailable. Rather, the safe harbor may be unavailable simply because the donor is already filing Form 709 for an entirely unrelated transaction.
Whether this reflects a deliberate policy choice or an unintended consequence of the safe harbor’s drafting remains uncertain. Until additional guidance is issued, practitioners should evaluate Trump Account contributions in the context of the donor’s overall gift and GST tax reporting obligations rather than viewing them in isolation.
Contact Us
The Trusts & Estates professionals at PKF O’Connor Davies assist individuals, families, fiduciaries and advisors with sophisticated gift, estate and generation-skipping transfer tax planning and compliance. If you have questions about Trump Accounts, Form 709 reporting, or broader wealth transfer strategies, please contact the partner in charge of your account or any of the following to discuss how these new rules may affect your planning.
Bhakti Shah, JD, CPA
Partner
bshah@pkfod.com | 908.956.0464