The Treasury Department and Internal Revenue Service issued Revenue Procedure 2026-25 on June 29, 2026, establishing a gift tax safe harbor for certain contributions to Trump Accounts that will spare millions of donors from filing federal gift tax returns.
Trump Accounts are tax-advantaged savings vehicles for children under age 18, created under Section 530A of the Internal Revenue Code by the One, Big, Beautiful Bill Act. Contributions to these accounts have been capped at $5,000 per year, with funds subject to strict distribution restrictions during the “growth period” before the beneficiary turns 18. Because beneficiaries cannot freely access the money, a critical tax question emerged: whether gifts to these accounts qualify for the annual gift tax exclusion or must be reported as “future-interest” gifts on Form 709.
Before the safe harbor, any contribution to a Trump Account could be treated as a gift of a future interest in property—a category that does not qualify for the annual per-donee gift tax exclusion. Under longstanding federal tax law, future-interest gifts must be reported on Form 709 regardless of amount. With nearly six million Trump Account elections already on file as of June 2026, this interpretation would have created a massive compliance burden, potentially requiring several million new gift tax filings annually, according to the Liskow & Lewis law firm analysis of the guidance.
How the Safe Harbor Works
Revenue Procedure 2026-25 resolves the ambiguity by creating a safe harbor under which qualifying contributions are treated as completed gifts that are not future interests, allowing donors to claim the annual exclusion and avoid filing a gift tax return. To qualify, a donor must satisfy all five of the following conditions in a given calendar year: the taxpayer must be an individual; the only taxable gifts made during the year are cash contributions to one or more Trump Accounts for beneficiaries under age 18; total gifts to each beneficiary (including Trump Account contributions) do not exceed the annual exclusion amount of $19,000 for 2026; the contributions do not generate gift or generation-skipping transfer tax liability after applying the donor’s remaining lifetime exclusion or exemption; and no gift tax return is otherwise required or filed for that year for any other reason, such as portability elections or GST allocations.
If any single requirement is not met, the safe harbor does not apply, and the donor must file a gift tax return reporting all gifts for the year, including the Trump Account contributions as future-interest gifts. This all-or-nothing structure means that donors making larger gifts, multiple contributions to the same beneficiary, or gifts that trigger other filing obligations must track cumulative gifts carefully and may not benefit from the relief.
Why It Matters
IRS Chief Executive Officer Frank J. Bisignano stated that the agency “responded to concerns raised by taxpayers who planned to make contributions to a Trump account but worried such donations would trigger the gift tax reporting rules.” The relief granted “will reduce the potential burden placed on friends and family who want to put money into a Trump account,” he said.
The safe harbor addresses a genuine operational risk: the IRS currently processes only about 300,000 gift tax returns per year, according to Liskow & Lewis. Absent this guidance, the agency could have faced a surge in filings as families began funding Trump Accounts starting July 4, 2026, when contributions became permitted. For the vast majority of donors—those making modest, single-year contributions to one beneficiary—the safe harbor eliminates an unnecessary filing burden and clarifies that their contributions will qualify for the annual exclusion.
Sources
- IRS (.gov) — Treasury and IRS news release (IR-2026-80) announcing Revenue Procedure 2026-25 and the safe harbor for gift tax reporting.
- Liskow & Lewis, APLC — Legal analysis of the safe harbor, including the five requirements, the future-interest issue, and the compliance burden that would have arisen absent the guidance.
- ASPPA (American Society of Pension Professionals and Actuaries) — Confirmation that certain taxpayers will not be required to file gift tax returns under Revenue Procedure 2026-25.
- CNBC — Reporting that contributions to Trump Accounts will not be subject to gift tax reporting under the safe harbor rules.
