IRS Eases Gift Tax Rules for Trump Accounts

Gift tax returns? We don’t need no stinkin’ gift tax returns. 

The IRS released new guidance last week that largely (but not entirely) resolves concerns about Trump account contributions inadvertently triggering burdensome gift tax reporting requirements for families and individuals. Revenue Procedure 2026-25 provides what is essentially a transfer tax waiver that treats Trump account contributions as completed “current interest” gifts rather than “future interest” gifts when those contributions meet certain requirements, preventing the need to pay and report gift taxes. That may sound like a technical nuance, according to Kevin Matz, partner at ArentFox Schiff, but the practical implications are significant for taxpayers and the IRS. 

“The IRS received about 300,000 Form 709 gift tax returns in fiscal 2025,” Matz told Advisor Upside. “In contrast, because nearly 6 million elections to open Trump accounts have already been received, the number of gift tax returns filed annually could have exploded to several million.” That’s off the table now, Matz said, but the IRS guidance is not a blanket policy for all Trump account contributions, so advisors and their clients need to study up on the rules to ensure compliance.  

Not Any Old Gift 

Trump account contributions are technically structured as taxable gifts. Put simply, that’s because the funds are inaccessible to the child until age 18. That technically makes the contributions “future interest” gifts under the tax code, which normally triggers taxation and must be reported on a Form 709 gift tax return. Statutory language notwithstanding, Matz said, it was not Congress’ intent to make Trump account contributions taxable future interest gifts that can’t be counted as part of a taxpayer’s annual gift tax exclusion, set at $19,000 per recipient in 2026. Hence Revenue Procedure 2026-25 and its gift tax waiver or “safe harbor.”

“It’s undeniably helpful for taxpayers who fit within the scope of the revenue procedure, because it is complex and expensive to prepare Form 709,” Matz said. “However, the policy unfortunately creates two different treatments of Trump account contributions, depending on what situation the taxpayer is in.” 

The safe harbor requirements (simplified) are as follows: 

• The taxpayer is an individual whose only would-be taxable gifts during the year are cash contributions to one or more Trump accounts that do not exceed the annual exclusion amount.
• Their contributions to Trump accounts don’t generate either a gift or generation-skipping transfer tax liability, after application of the taxpayer’s remaining applicable credit amount against the gift tax or remaining GST tax exemption.
• Disregarding the Trump account contributions described above, no gift tax return is otherwise required to be filed for other purposes.

A Permanent Fix? Presumably, the Treasury and the IRS didn’t believe that they possessed the authority to grant broader, across-the-board relief based on the statutory language Congress adopted, Matz said. He believes Congress should therefore consider a technical correction to the statute to eliminate the disparate treatment of Trump account contributions.