Rev. Proc. 2026-25 (June 29, 2026), 26 CFR 601.601; IRC §§ 530A, 2010, 2503, 2505, 2642, 2662, 6019

Under Revenue Procedure 2026-25, the Internal Revenue Service (IRS) has established a transfer tax safe harbor for certain individual donors making contributions to "Trump accounts" established under Section 530A of the Internal Revenue Code. This administrative guidance clarifies that qualifying contributions are "treated as completed gifts that are not gifts of future interests in property and to which the annual per-donee gift tax exclusion applies," thereby relieving eligible taxpayers of the obligation to file gift tax returns (Form 709) for these transfers.

Statutory Framework and Facts of Trump Accounts

The legislative origin of these accounts traces to "Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act," which "added section 530A and related provisions concerning Trump accounts to the Code". Under the statute, a Trump account is defined as "a type of traditional individual retirement account (IRA) that is established under section 530A for the exclusive benefit of an eligible individual or the eligible individual’s beneficiaries and is designated as a Trump account at its establishment". To qualify as an eligible individual, the person must be someone "(i) who has not attained age 18 before the close of the calendar year in which an election to open an initial Trump account (initial Trump account election) is made, (ii) for whom a social security number has been issued before the date of the initial Trump account election, and (iii) for whom the initial Trump account election is made". The Code designates the eligible individual as the owner of the Trump account, referred to as the "account beneficiary".

Trump accounts differ significantly from traditional IRAs under Section 408 because they are subject to special rules that apply during the "growth period," which is defined as the "period ending before January 1 of the calendar year in which the account beneficiary attains age 18". During this growth period, "no distributions may be made from a Trump account, except for qualified rollover contributions, a qualified ABLE rollover contribution (made only during the calendar year in which an account beneficiary attains age 17), distributions of excess contributions, and distributions upon the death of the account beneficiary". Consequently, "the account beneficiary of a Trump account generally does not have access to amounts in the Trump account during the growth period".

These accounts can receive funding from various sources, including "nonprofits, governments, employers, and individuals". Contributions made during the growth period are subject to an "annual contribution limit of $5,000, adjusted for inflation after 2027". However, this annual limit "does not apply to the $1,000 Trump account pilot program contribution, qualified general contributions (which are funded by nonprofits and certain governmental entities), or qualified rollover contributions". Any other contribution, including those from employers, is subject to the limit. Public adoption of the program is massive, with "nearly six million elections to open a Trump account" received as of June 4, 2026.

The Administrative Dilemma and Reasons for IRS Action

Following the enactment of Section 530A, the Treasury Department and the IRS "received stakeholder comments and are aware of public commentary raising questions about the transfer tax consequences for individual donors who make contributions to Trump accounts, including whether such contributions constitute taxable gifts that must be reported on a gift tax return". Because the account beneficiary lacks access to the funds during the growth period, "such reporting would be required if contributions to Trump accounts are treated as gifts of future interests".

The IRS recognized that the "vast majority of individual donors to Trump accounts are unlikely to ever owe federal gift, estate or GST tax due to the lifetime basic exclusion amount of $15,000,000 and the corresponding $15,000,000 GST exemption amount". For these typical donors, "the cost and other burdens of complying with gift tax reporting requirements could outweigh the anticipated financial savings benefit of making one or more contributions to a Trump account". Furthermore, "gift tax reporting compliance by these donors could dramatically increase the burden on the IRS to process gift tax returns for individual donors who are unlikely to ever be subject to gift, estate, or GST tax". In fiscal year 2025, the IRS received "approximately 300,000 gift tax returns (Form 709)". Given the six million account elections received, "the number of gift tax returns filed annually could be expected to increase from roughly 300,000 to several million". Thus, "in the interest of sound tax administration," the IRS issued this Revenue Procedure to establish a "transfer tax safe harbor for certain individual donors".

Transfer Tax Analysis under the Internal Revenue Code

The federal gift tax under Section 2511(a) is comprehensive, applying to "a transfer of property by way of gift, whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible". Under Section 2503(a), taxable gifts are defined as total gifts made during the calendar year less any available deductions. Under Section 2503(b)(1), "each donor may exclude from the amount of the donor’s gifts those made to a particular recipient to the extent the total value of the donor’s gifts to that recipient does not exceed this annual exclusion amount, provided that those gifts are not gifts of a future interest in property". For the calendar year 2026, the annual per-donee gift tax exclusion is "$19,000 per individual recipient," which is available in addition to the lifetime basic exclusion amount.

Under Sections 2010(c), 2505(a), and 2631(c), the lifetime basic exclusion amount and the GST exemption amount are "$15 million" for calendar year 2026. Under Section 2010(c)(5), if a portability election is made by a deceased spouse's estate, the "deceased spousal unused exclusion or DSUE" is added to the surviving spouse's basic exclusion amount. Section 2601 imposes a generation-skipping transfer (GST) tax on certain transfers, and Section 2631(c) provides a lifetime GST exemption amount that is "equal to the basic exclusion amount for gift and estate tax purposes (thus, $15,000,000 for calendar year 2026)".

Under Section 6019, and Section 2662 for GST direct skips, individuals are generally required to file a gift tax return to report taxable gifts. Although gifts at or below the annual per-donee exclusion do not require a return, "gifts of future interests in property are required to be reported on a gift tax return because they are not eligible for the annual per-donee gift tax exclusion". Because the distribution restrictions in Section 530A prevent the beneficiary from accessing account funds during the growth period, these transfers would technically be classified as gifts of future interests under default transfer tax principles, thereby triggering a mandatory filing obligation.

Safe Harbor Requirements and Scope of Application

To resolve this issue, the IRS established a safe harbor whereby qualifying contributions are "treated as completed gifts to the account beneficiary that is not a future interest in property and to which the annual exclusion applies for purposes of gift tax, GST tax and gift tax reporting". The safe harbor applies for a particular calendar year only if five strict requirements are met under Section 4.02.

First, the taxpayer must be "an individual".
Second, "the only taxable gifts made by the taxpayer during the calendar year are cash contributions (in the form of cash, check, money order, or electronic funds transfer) to one or more Trump accounts, each made before the calendar year in which the account beneficiary attains age 18".
Third, the "taxpayer’s total gifts during the calendar year to each individual who is an account beneficiary, including contributions to that account beneficiary’s Trump account, do not exceed the annual exclusion amount under section 2503(b) ($19,000 for 2026)".
Fourth, the "contributions to Trump accounts made during the calendar year do not generate for that calendar year either a gift or GST tax liability, after application of the taxpayer’s remaining applicable credit amount against the gift tax, or remaining GST exemption".
Fifth, "disregarding the Trump account contributions... no gift tax return is required to be filed, and no gift tax return is otherwise filed, for that calendar year by or on behalf of the taxpayer, whether for GST tax, portability, or other purposes".

Illustrative Scenario and Procedural Implications

To clarify the mechanics of these requirements, the IRS provides a detailed illustration in Section 6 of the Revenue Procedure. In the example, a taxpayer in 2026 "contributes $5,000 cash to each of three Trump accounts established for account beneficiaries A, B, and C, and makes an additional gift to C of $13,000 cash". If the taxpayer makes no other gifts, does not otherwise file a gift tax return, and the contributions do not generate any tax liability after considering the taxpayer's remaining applicable exclusion or GST exemption, "the requirements of section 4.02 of this revenue procedure are met". Consequently, the "taxpayer’s 2026 Trump account contributions will be treated as completed gifts to A, B, and C that are not future interests in property".

However, if the taxpayer's cash gift to C in 2026 is increased to "$14,500," the total gifts to C ($5,000 contribution plus the $14,500 gift) equal $19,500, which means "the requirement in section 4.02(3) of this revenue procedure is not met because Taxpayer’s total gifts to C during calendar year 2026 exceed the annual per-donee gift tax exclusion under section 2503(b) of $19,000". Under these facts, "Taxpayer must file a gift tax return for calendar year 2026 reporting all 2026 gifts, and must report the Trump account contributions to A, B, and C as gifts of future interests".

Administrative Compliance and Concluding Safe Harbor Treatment

Under the safe harbor, if each of the requirements of Section 4.02 is met, "each Trump account contribution made by the taxpayer during that calendar year will be treated as a completed gift to the account beneficiary that is not a future interest in property and to which the annual exclusion applies for purposes of gift tax, GST tax and gift tax reporting". The ultimate conclusion is that "taxpayers within the scope of section 4 of this revenue procedure will not be required to file a gift tax return reporting such contributions".

For administrative recordkeeping, the IRS states that "taxpayers should maintain records sufficient to substantiate compliance with the safe harbor rules". These are treated as "general tax records under §1.6001-1(e)," which are already approved under OMB control number 1545-0074, meaning that "the revenue procedure does not impose any additional burden for taxpayers for purposes of PRA". The administrative drafting of this Revenue Procedure was led by Rachel K. Downs of the Office of Associate Chief Counsel (Passthroughs, Trusts, and Estates).

Prepared with assistance from NotebookLM.