Some States Are Taxing Trump Accounts—What Families Need to Know

Minnesota Gov. Tim Walz has staked out an anti-Donald Trump resistance position on nearly every issue, but backs changing his state’s tax law for children’s accounts bearing the president’s name. 

“Minnesota does not adopt federal tax law changes automatically. The state legislature must pass a tax conformity bill in order to adopt federal tax law changes. Until that happens, these accounts would be taxable,” Shane Delaney, assistant commissioner at the Minnesota Department of Revenue, told The Daily Signal. 

Delaney said Walz released a supplemental budget proposal on Tuesday that “conforms with the federal Trump accounts.”

At least seven states will impose income taxes on the Trump Account earnings, the Washington Post reported. These include battleground states such as Wisconsin and Pennsylvania; deep blue states such as California, Hawaii, and Massachusetts; and states that went solidly for Donald Trump in past elections, such as Kentucky and South Carolina. 

“California hates the fact that kids might get a leg up to be independent when they reach adulthood. That bothers them greatly,” John Kartch, director of communications with Americans for Tax Reform, told The Daily Signal. “Blue state governments want to extract the maximum amount of taxes from people’s wallets.”

South Carolina lawmakers are considering a provision that makes these accounts tax-deferred, a spokesman for the South Carolina Department of Revenue told The Daily Signal.

More than half of the states and the District of Columbia either automatically adopt federal tax code exemptions or don’t have state income taxes. So, there’s no danger for those residents to pay state taxes on the accounts.

In most cases, the states will tap the revenue by doing nothing. Several states–such as South Carolina and Minnesota–are considering legislative fixes to exempt the Trump Accounts from income taxes.

By contrast, California’s three-member Franchise Tax Board–made up of two elected officials and one appointed by Gov. Gavin Newsom–refused to make Trump Accounts tax-deferred accounts, as the state already does for individual retirement accounts, 401(k) plans, and pensions.

“California is the major culprit in this,” Kartch said. “Now, California chose to make these taxable. That’s what sets this apart from other states that are taxing the accounts.”

The child-focused investments were created by the One Big Beautiful Bill Act in 2025 and allow parents to open a Trump Account for any child under the age of 18. Every American child born from 2025 through 2028 is eligible to receive a one-time $1,000 contribution from the U.S. Treasury Department invested in an index fund. When the child reaches age 18, the account converts into a traditional IRA. Nonprofits, individuals, and employers can contribute to the accounts. 

Pennsylvania Gov. Josh Shapiro, a Democrat, isn’t pushing for changes to the law, nor is the state legislature, said Brandi DeAngelo, deputy communications director for the  Pennsylvania Department of Revenue.

“Under current Pennsylvania law, investment earnings from these accounts are subject to the personal income tax, as the commonwealth does not automatically conform to federal tax law,” DeAngelo told The Daily Signal. 

“Any change to the tax treatment of these accounts would require action by the Pennsylvania General Assembly, and at this time, the Department of Revenue is not aware of any specific proposals to make these accounts tax-deferred,” DeAngelo continued. 

Another battleground state, Wisconsin, will be milking the accounts for revenue. 

“Earnings will be taxable for Wisconsin residents,” Jennifer Bacon, communications director for the Wisconsin Department of Revenue, told The Daily Signal. “… The legislative session has concluded, and no legislation was passed that would change how the accounts are taxed.” 

“Trump Accounts are a historic initiative to level the playing field for a generation of working-class children to be able to achieve financial independence and build wealth with a tax-free seed investment from the federal government,” White House spokesman Kush Desai told The Daily Signal.

“Democrats intentionally sabotaging this policy achievement out of either Trump Derangement Syndrome or incompetence isn’t just a boneheaded failure, it’s an egregious betrayal of America’s children.”

After Congress passed the One Big Beautiful Bill Act, several states moved to change the rules on tax conformity with the federal Internal Revenue Code on several fronts beyond the Trump accounts, according to the National Conference of State Legislatures.

“Rolling conformity” is when states automatically adopt federal changes. Another is “static conformity,” when the state adheres to the federal code after a specific date. “Selective conformity” is when a state picks and chooses what provisions of the federal code to conform with.

Some states have “decoupled” from provisions of the 2025 federal tax law, according to the NCSL. 

Nathalie Dailida, spokeswoman for the Massachusetts Department of Revenue, said the administration in the state “has not proposed changes with respect to the provisions.” She noted that “Massachusetts does not conform” to Trump Accounts’ provisions.

Maine Gov. Jane Mills’ “supplemental budget proposal would conform to the federal tax treatment of Trump Accounts,” said Sharon Huntley, director of communications for the Maine Department of Administrative and Financial Services.

In Vermont, a blue state with Republican Gov. Phil Scott, the legislature is considering overall conformity to the new federal law, said Rebecca Sameroff, deputy commissioner for the Vermont Department of Taxes.

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