What Happened?

Millions of Americans living in U.S. territories can open the new federally backed children's savings accounts created by the One Big Beautiful Bill Act, but not everyone gets the same deal. A Congressional Research Service (CRS) analysis, released by Congress's nonpartisan research arm, found that where a child is born and how a territory handles taxes can change what families actually receive.

The accounts, called Trump Accounts, let families save money for children with tax advantages. Private contributions are capped at $5,000 a year, and employers can add up to $2,500 per year tax-free. The federal government also makes a one-time $1,000 deposit for eligible children born between 2025 and 2028, but only for U.S. citizens.

Why Does it Matter to Me?

That citizenship requirement creates a direct gap for families in American Samoa. Children born there are generally considered U.S. nationals, not U.S. citizens, so they do not automatically qualify for the $1,000 federal contribution. Children born in Puerto Rico, Guam, the U.S. Virgin Islands, and the Northern Mariana Islands are generally U.S. citizens at birth and can qualify.

The tax benefits also vary by territory. Puerto Rico runs its own separate income tax system, so residents there may get little or no value from the federal tax deduction tied to the accounts. Guam, the U.S. Virgin Islands, and the Northern Mariana Islands use "mirror-code" systems that copy federal tax law, but the $1,000 contribution rule is not automatically included unless each territory separately elects to adopt it.

When the money can eventually be withdrawn, it follows rules similar to a traditional individual retirement account (IRA). Withdrawals before age 59 and a half face a 10 percent penalty unless the money goes toward college costs, a first home purchase of up to $10,000, birth or adoption expenses of up to $5,000, or emergency costs of up to $1,000 per year.

Both sides, now

The CRS analysis does not include arguments from supporters or opponents of the policy. It describes the rules as written. Congress passed the One Big Beautiful Bill Act, which created Trump Accounts, and the citizenship and tax-code differences that produce uneven territory benefits are a direct result of how that law was written and how each territory's tax system works. Congress has the power to pass new legislation to address any gaps, though no such bill has been introduced.

What happens next?

The CRS analysis identifies the uneven treatment but does not recommend a fix. Any change, such as extending the $1,000 contribution to U.S. nationals in American Samoa or adjusting how mirror-code territories adopt the provision, would require Congress to pass new legislation. There is no vote scheduled on any such change, and no deadline requires one.

---

Spot something wrong? Report an issue with this article