Tax panel considers conforming with feds on ‘Trump accounts’

Hey, little baby. Welcome to the world. Here’s $1,000.

That’s how the federal government’s new “Trump accounts” may appear at first glance. Under a pilot program established within “the One Big Beautiful Bill Act,” citizen children born from 2025 to 2028 can receive a one-time $1,000 deposit from the federal government in an individual retirement account.

But it’s a special kind of IRA designed for those under age 18, with the adults in their lives permitted to contribute up to $5,000 per year to each account. That money gets invested in mutual funds or exchange traded funds.

Such contributions aren’t tax deductible until the child reaches age 18, at which point the “account” becomes a conventional IRA, with distributions subject to an additional tax penalty of 10% if meted out before age 59 1/2. Excess contributions result in a 6% excise tax.

Yet if you’re a Minnesotan who wants to contribute to one, there are tax implications that Rep. Jim Joy (R-Hawley) would like to remedy.

Hence, he’s sponsoring HF3754, which would adopt a section of the federal law into the state’s tax code and provide two tax benefits to Minnesotans: excluding from gross income up to $2,500 from employer contributions to these accounts, as well as any contributions made by a government and certain contributions by nonprofit organizations.

On Tuesday, the House Taxes Committee laid the bill over for possible omnibus bill inclusion.

“This is a tax conformity bill,” Joy said. “I just think this is one of those bills that has very little fiscal cost and something we should move forward with.”

Taxpayers may make contributions to these accounts, beginning July 4, 2026.