There’s been a lot of talk about the Big Beautiful Bill that was signed into law on July 4, 2024, but one of the more under-the-radar aspects of the bill is that it offers $1,000 for some United States citizens.
Those citizens are the littlest among us. According to the bill, each child born between 2025 and 2028 is getting a gift from Congress and the president in the form of a $1,000 deposit into a bank account. While it’s free money, they can’t spend it right away. The idea is for this little bit of money to grow over time and encourage investing. The accounts start at birth and with a $1,000 balance.
“It’s an IRA for kids,” Evan Morgan, a principal in the tax advisory group at Kaufman Rossin, an accounting and advisory firm, told USA Today in an Aug. 30 feature.
“To me, if I drew a best-case scenario on that thousand dollars, it would be sitting in that IRA, compounding, until I retired,” J. Spencer Williams, founder and CEO of the Retirement Clearinghouse, a financial technology firm, also told USA Today.
According to this bill, the government will make an account for any baby born as an American citizen between 2025 and 2028, and they’ll put a one-time deposit of $1,000 in it. To get the money, the baby just needs to have a Social Security number.
“Parents and others may contribute up to $5,000 a year into the accounts until the child turns 18,” USA Today adds. “An employer may contribute up to $2,500 toward the $5,000 cap. State and local governments and private charities will be allowed to make broad contributions.”
Also, nobody is allowed to put money in the accounts until 2026. So, how do you get the cash? To get an account, parents will likely have to check a box on a tax form saying that they are new parents, Williams of the Retirement Clearinghouse told USA Today.
Also part of the Big Beautiful Bill, “the Bill expands many provisions from the TCJA, impacting qualified small business stock, business income deductions, employee retention credits, and more,” according to Stinson. They add that “the Bill changes the global intangible low-taxed income and foreign derived intangible income regimes, along with other rules for controlled foreign corporations.”
So, those expecting to be new parents between 2025 and 2028 should stay alert of how to claim their account.
