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Warning: Last updated 3/26/2026: This information is preliminary and will be updated later as the IRS guidance on Trump Accounts develops.

Starting around July 2026, Americans have another tax-advantaged savings account to take advantage of: Trump Accounts, known in the tax code as 530A accounts. If your child was born between 2025 – 2028, you will also get $1,000 tax-free from the Federal government. Sign up all your kids online at https://form.trumpaccounts.gov, where you electronically submit the enrollment IRS Form 4547. Submit more than one form if you’re opening accounts for more than 2 kids.

Parents can fund them while the child is 0 – 17 (by year end.) Once the child is 18, the account can become a Traditional IRA owned & managed by the (now adult) child.

Why open a Trump Account?

If your child was born 2025 – 2028, it’s worth it just to get the $1,000. Your employer might contribute as well in the future.

Most contribution sources, including friends, family, and employers, are capped at a combined annual limit of $5,000 in 2026, indexed to inflation. The $1 K Federal seed money and certain qualified non-profit contributions won’t count towards the annual limit.

If your employer offers payroll contributions (up to an IRS max of $2,500 per employee, regardless of how many children the employee has; you can split up the amount by child), you can contribute pre-tax as well, just like your 401k, which you should definitely do if you have the cash to invest and want it to go to your kid(s).

Anyone else could also contribute, including you as the parent outside of your employer, but on an after-tax basis, which is not nearly so enticing as pre-tax payroll deductions. Generally, you’d be better off using a UTMA/529 or your own taxable brokerage instead of an after-tax Trump account contribution.

Make sure to keep track of the account’s cost basis over time for your child if you make non-deductible/after-tax contributions.

At 18, Trump Accounts are supposed to behave like Traditional IRAs, at which point you should be able to either convert them entirely to Roth IRAs, perhaps over a period of a few years while your child has low earned income.

Or, if your child gets a 401k, they can isolate the basis and convert just the after-tax basis of the Trump Account to Roth IRA, and simultaneously move the pre-tax amounts to their 401k. This is the best option for most folks.

What investments can you choose?

Investments will be low-fee (< 0.1%) index funds. That’s all I know as of early 2026.

How will Trump Accounts be taxed?

Like Traditional IRAs, apparently. Your child gets control of them at 18–they are ‘locked’ prior to then, only open for contributions & investing, not withdrawals– and could use the funds for education or a first-time home purchase (standard IRA exceptions), paying just regular income taxes (which might be low depending on their tax bracket), and no 10% penalty that a regular withdrawal for an unqualified purpose would incur.

How are withdrawals ordered for tax purposes?

https://www.forbes.com/sites/davidkudla/2026/02/27/what-to-know-about-the-new-530a-trump-accounts-for-children

“Withdrawals of pre-tax contributions and earnings (on both pre-tax and after-tax contributions) taken between ages 18 and 59 ½ will be subject to ordinary income tax. In most cases, a 10 percent early withdrawal penalty will also apply.

However, the 10 percent penalty may be waived for qualified expenses, such as higher education costs or a first-time home purchase.

Although after-tax contributions may be withdrawn without additional income tax, distributions must be taken proportionally. This means the account holder cannot withdraw only after-tax contributions; each distribution will consist of both taxable and non-taxable amounts. [WW: ‘Cream in the coffee’ rules. Credit to Ed Slott.]

After age 18, Roth conversions are permitted. This strategy may allow after-tax funds to grow tax-free in the future, depending on individual circumstances. Normal distribution rules apply once the child reaches age 59 ½.”

In general, your student should try to fund any education you can’t pay for from 529s, income etc from the lowest interest rate loan available to the highest. The ordering below usually matches that, but make sure to compare each source of available financing.

FAFSA student loans– especially the subsidized ones which don’t begin to accrue interest until you graduate– are almost certainly going to be the best. This is even more true given their historically generous repayment options like ‘Income-Driven Repayment’ as well as public service loan forgiveness, which effectively allow the student to pay less than the stated interest rate. There’s also the chance that a future administration will forgive loans in some way.

Parent Plus loans may be cheaper than private loan options, which parents may have to co-sign (be liable for) anyway. Make sure to see if the (private) school itself offers student loans, and under what terms.

Should you just go to a cheaper school?

If your income/529 plan savings + FAFSA student loans won’t cover the costs of your little Einstein’s 4-year degree, strongly consider going to a cheaper school. Quality in-state, public schools offer a terrific value compared to, say, small liberal arts colleges. Unless you’re doing to a Harvard, Yale, Princeton, MIT, Stanford, etc, is anyone really going to care about the name brand of your school? Are you really going to increase your earning power or other life satisfaction but such an incredible amount to justify paying, say, $80,000 a year for a small, liberal arts college vs $40,000 for a good state school?

Wouldn’t you rather have (1) an English degree with State U with no debt vs (2) an English degree from Fancy Pants Superior U with $200,000 in debt?

Earnings potential is largely driven by the student themselves, not where they go to school. Expensive schools are usually ranked highly not because they make students smarter, but because the students are smarter to begin with. You need to determine how much your college experience will add to YOUR life, not just the average quality of the students.

Sure, if you want to be CEO of Megahyperglobalcorp (Ticker: EVIL) or a US Senator, go to Harvard or Yale if you can get in. If you just want to be in middle management, or get hired as a crack software engineer by a FAANG firm, any school with a decent business, or computer science program, will do.

Undergrad loan for dependent students

1. FAFSA student loans, subsidized + unsubsized ($5,500 /year 1st year, $6.5 K 2nd, $7.5 K 3+ for lifetime total of $31 K, or $26 K if your student finishes in 4 years) 6.39% as of March 2026.
2. Parent Plus loans: $20 K per year max and $65 K lifetime cap (previously unlimited) for new loans after July 1st, 2026 per the OBBB act. 9% as of March 2026. They are also no longer eligible for income-drive repayment past the July 1st, 2026 deadline.
3. Loans aka ‘payment plans’ from the private school itself: https://www.ravennasolutions.com/blog/breaking-down-the-financial-aid-formula-for-private-schools/
4. Private student loans from a 3rd party bank: rate dependent on credit score of the student or parents.
5. Selling a kidney.

Graduate loans for dependent students

Similar ordering list as above for Undergrad, but with different limits.

Gaming the system on subsidized loans

If you have loans that don’t accrue interest until the student graduates, you can play the game of (1) taking out the max in subsidized (or low interest) loans, (2) investing the funds you WOULD have used to pay college in investments (you SHOULD be spending your 529 funds, however, so this assumes your taxable brokerage or income) then (3) re-paying the student loans after graduation around the time the interest starts to accrue, using (2) to pay off (1).

Keep in mind that if you’re investing in anything risky, like stocks, you could lose money via a market downturn during college vs just using that money to pay tuition. The risk-free method would be to invest in bonds or high-yield cash during college, eking out a smaller, but ‘guaranteed’ return over, say, 4 years of undergrad on ~$18 K of subsidized FAFSA loans (at 3%, you might earn a few hundred bucks. Not really a huge reward, but if you like to take advantage of a Federal tax system that privileges the shrewd upper-middle class, go for it.)

Can you use Direct Loans for international degrees or study abroad?

Yes, IF your school is on this list AND noted as ‘Eligible’, then you can take out new loans to pay for education there. If they are on the list with ‘Deferment Only’ as the status, you can only defer payments on old loans (from a prior institution), but can’t take out loans for that institution: https://studentaid.gov/sites/default/files/international-schools-in-federal-loan-programs.pdf (Updated quarterly, so check back as needed!)

DISCLAIMER: I am not an accountant or CPA, but here’s what I understand about rental taxation. This is NOT tax advice, and you should run anything here by a tax accountant/CPA.

There are three important property types of tax treatment out there for landlords and personal homeowners alike to know about.

Section 1231 – Business Property held for over 1 year

This includes property held for business, including rental real estate, that you’ve owned for over 1 year. Business machinery like farm equipment, expensive tools, computers, land, timber, and livestock also fall into this category. It doesn’t include product for sale like inventory, and also doesn’t include intangible assets like patents.

The key things to know are that you can depreciate it, i.e.: take a tax deduction from your business for its loss in value each year, per IRS guidelines, and that the gain when it’s sold is equal to the selling price minus the cost basis (what you paid for it, plus improvements, but not mere ‘maintenance’ costs, minus all the depreciation you’ve taken over the years.)

The amount attributed to value – (cost basis + depreciation) = capital gain, and the ‘depreciation recapture’ is taxed as ordinary income.

For example, say you bought a rental for $250 K, took depreciation of $50 K while you owned it, and added a new bathroom to it for $100 K, then sold it for $500 K. Your capital gain would be $500 K – ($250 K purchase price – $50 K depreciation (for a $200 K net basis) + $100 K improvements ) = $200 K, and then you’d also have $50 K taxed as ordinary income due to the accumulated depreciation.

Section 1245 –

Section 1250 – Buildings (i.e.: rental real estate)

For rental real estate post-1986, straight-line depreciation (vs ‘accelerated’) is the only method allowed by the IRS. For 1231 properties with only straight-line depreciation, they fall into Section 1250 for taxation, which basically means all gains are taxed as capital gains, with no ordinary income taxation on ‘depreciation recapture’ like for Section 1245 property.

https://www.investopedia.com/terms/u/unrecaptured-1250-gain.asp

Personal residence

This is the kind of property most everyone is familiar with: you buy it to live in yourself. You might rent it out later, but for now, it’s just your personal residence. This also applies to, say, vacation property that you primarily use for personal use, or vacant land that you bought just for fun and aren’t monetizing in any way. The most important things to know about your personal residence is that

1) you don’t owe anything for income taxes for the ‘imputed rent’ value it gives you,

2) you might benefit from itemizing your taxes (IF you itemize; most people don’t benefit from it and take the ‘standard deduction’ intead) and deducting the mortgage interest you pay, and

3) when you sell, you get to exclude up to $250 K if tax-filing Single ($500 K if Married Filing Jointly) of the capital gains as long as the owner lived in the home for two of the past five years.

Rental real estate taxation

https://www.fool.com/the-ascent/taxes/taxes-on-selling-a-house-what-all-homeowners-should-know/

https://www.fool.com/the-ascent/taxes/real-estate-taxes-your-complete-guide/

Good guide with sample calculations of rental profit/loss calculations here: https://thetaxbooks.com/blog/passive-vs-active-rental-income-understanding-irs-rules-and-tax-implications/

How to avoid taxes for selling: 1031 like-kind exchanges

Under certain circumstances, you can ‘exchange’ (sell one and buy another) business real estate like a rental property. This is called a 1031 or ‘like-kind’ exchange.

IRS guidance on the topic.

Source for the below: Motley fool on 1031:

“And that real estate can’t be just any old sort of real estate; it must be a “like-kind” of real estate. In short, it must have already been an investment property and must continue to be one after the exchange.

You can’t, for example, trade an apartment building for a condo that was someone’s personal home immediately before the exchange. You’d have to trade the apartment building for a condo that had been used as an investment.

[…]

It can be hard to find a like-kind property immediately available for a 1031 exchange and that the owner wants to swap for your property. Therefore, there’s such a thing as a delayed exchange. In a delayed exchange, an intermediary holds the cash after the property you wanted to exchange is sold outright and then uses it to buy another property that would otherwise qualify for a 1031 exchange.

You must choose your new property within 45 days of the sale. In fact, you can generally designate up to three properties as long as you close on at least one (in some cases, you can choose more). You also must close on the new property within 180 days of your initial sale. Since these exchanges don’t happen concurrently, they’re considered delayed.”

How to execute a 1031 exchange

Source for below: https://www.fool.com/real-estate/2022/06/15/think-real-estate-has-peaked-heres-how-to-sell-wit

“1031 exchange steps

Close on the replacement: You have 180 days from the closing of the original sale to close on a replacement property or properties. Once you close, the net purchase price and net sales price of the two transactions will be compared to ensure that the exchange was done correctly and to calculate the new cost basis of the property for taxes.

Find an intermediary: You can’t touch the money from the sale of your existing property, or it will wipe out the 1031. You need to find a trustworthy local intermediary who can work through the transaction with you.

Sell your property: You may want to hold off on actually closing a sale until you’ve at least started a few of the next steps, but selling your existing property is a key part of the transaction.

Identify replacement targets: Once you sell your existing property, you have 45 days to identify replacement investments, and you must purchase one of those targets. You can invest in multiple new properties, as long as the total purchase exceeds the net sale price of the existing property. The specific targets must be sent in writing to your intermediary by the 45-day deadline. You can identify up to three properties with an unlimited total purchase price, or an unlimited number of properties with a max purchase price of 200% of the sale price of the original property.

[…]

You could also invest in a different real estate type altogether. Here are a few of the types of investments that are allowable in a 1031 exchange:

• Multifamily: This is any property that has more than four units and is usually an apartment building or student housing.
• Commercial properties: This could be anything from a hotel to an office building to a self-storage facility. As long as the owner stays the same from property to property, (e.g., if you owned the original property through an LLC, the same LLC owns the new commercial property), there should be a wide variety of commercial options in your area.
• Farmland: This can be a great way to protect your portfolio from inflation — but you may want to hold off unless you already know a good farmer.
• Vacant land: Land banking was a popular concept 30 or so years ago. You buy raw land and hold it until you find a good investment opportunity. If you find land in a good area, it’s likely that the value will increase with inflation. Keep in mind that land banking won’t provide you with cash flow like rental properties will, but buying it could be a good way to keep some dry powder on the sidelines for a while.”

You can sell more than one property to exchange for another via 1031, but it just makes the timing that much harder, since the 45 and 180 day clocks start on the first sale.

More good examples of how the 1031 works, with actual dollars.

Personal residence exclusion and rental considerations

How rental income and expenses work

In general, you can deduct building depreciation, insurance, repairs/maintenance, property management (I assume $0 here for now?) and property taxes from rental income to get ‘Net Operating Income’. Then you also get to deduct depreciation and mortgage interest (IRS overview on this here.)

Here’s a calculator that includes tax estimates for rental income: https://www.rentwell.com/rental-property-returns-calculator

Personal residence capital gains exclusion

For the long-term capital gains exclusion, I believe so long as you meet the ‘2 years out of 5’ test you can preserve your capital gains exclusion ($250 K per person, for $500 K as a couple.) If, however, you rent for part of those 5 years, I think you don’t get the full exclusion, per this: https://www.kitces.com/blog/limits-to-converting-rental-property-into-a-primary-residence-to-plan-for-irc-section-121-capital-gains-exclusion/

If you plan to go OVER that amount of rental timeframe, also check with an accountant since it gets trickier to then re-establish that property as a primary residence to then get the capital gains exclusion before selling.

What if you rent before selling what was previously your personal residence?

Here’s an example of the taxation if you rent the house for more than 3 years and then try to to re-convert it into a primary residence by living there 2 years afterward before selling: https://www.merriman.com/beware-of-the-tax-cost-of-turning-your-primary-house-into-a-rental-property/

“Individuals can move back into the rental property to regain some of the exclusion.
Example 5: Tina and Troy purchased their house in June 2011 for $400,000. They turned it into a rental property in June 2015. In June 2019, they want to sell the house. Because it was a rental property for the past four years, all gains will be included in taxable income.

They decide to move back into their house in June 2019 and sell it in June 2021 for $850,000. They now qualify for the Section 121 exclusion because it was their primary house for at least two of the last five years.

When they sell their house in 2021, it had six years of qualified use as a personal residence and four years of non-qualified use as a rental property. The $450,000 of gains will be prorated between $450,000 x 60% = $270,000 that can be excluded and $450,000 x 40% = $180,000 that cannot be excluded.

Also, all depreciation that was taken during the four years as a rental property will be included in taxable income when the house is sold.

By moving back into their rental property for two years, Tina and Troy were able to exclude some, but not all, of the gains from the years they owned the property.”

Can you get clever by combining the personal residence exclusion with a 1031 rental property exchange?

Sounds like you can, per this, but CHECK WITH AN ACCOUNTANT: https://www.firstexchange.com/Convert-Primary-Residence-to-Rental-Combine-Section-121-and-1031

Disclaimer: I am not a tax preparer / CPA, and this is not tax advice. Check all of this yourself or with your accountant for your particular situation. This is only to illustrate the idea behind this method.

If you did a Roth conversion in a year in which you also ended the year with pre-tax IRA money in your own account (spouse IRAs don’t matter for this if married), you now have after-tax cost basis in your Trad IRA.

To get rid of it, you can ship the after-tax basis (convert it) to a Roth IRA and also put the pre-tax IRA amount into an employer 401k. You must do both before the end of the calendar year. Make sure to check with the employer (or self-employed) 401k first to ensure they will accept the incoming pre-tax IRA money. Then, either call your IRA provider to ask them to effect both transactions, or first convert your after-tax basis to Roth IRA, then move the remaining (pre-tax only now) Trad IRA money into the 401k afterward.

For more ways to isolate basis, read this: https://www.kitces.com/blog/roth-ira-conversions-isolate-basis-rollover-pro-rate-rule-employer-plan-qcd/

Method #1: Send the pre-tax money to a 401k (and the after-tax to a Roth IRA)

Let’s say you attempted a backdoor Roth IRA conversion in 2026. You put in $7,500 as a non-deductible Traditional IRA contribution, then turned around and converted the full $7,500 to Roth IRA. You neglected to realize that, at the end of 2026, you still had $22,500 in a different Traditional IRA as of 12/31/2026 (check your year end statement for the balance!)

Thus, you will have to pay taxes on the income of $7,500 * (1 – $7,500 / ($30,000)) = 7,500 * 75% = $5,625 of the conversion. The non-tax portion of the conversion was $1,875. So, your basis was the non-deductible basis portion of the conversion (the entire $7,500) minus the non-tax portion of the conversion ($1,875), which is $5,625. This becomes the new after-tax basis in your remaining $22,500 in your pre-tax IRA.

If your pre-tax IRA is now worth $25,000 in mid-year 2027, you can (1) convert the $5,625 to a Roth IRA and then (2) put the remaining $19,375 into your 401k (assuming your plan allows you to roll in outside funds. Check first before you do step (1)!)

Once you’ve done this, in 2027, you will owe no tax on the $5,625 Roth conversion, ASSUMING you end with a $0 IRA balance across all your pre-tax IRAs (including Traditional, Rollover, or SEP IRAs.)