VIEWPOINT: Trump Accounts & Enhanced Childcare Benefits: Employer Considerations for 2026

As employers finalize 2026 benefits strategies, two major provisions of the One Big Beautiful Bill Act (OBBBA) are poised to reshape how companies support working families. The first is the upcoming launch of Trump Accounts, a new federally backed Investment Retirement Account for children. The second is the significantly expanded Employer-Provided Childcare Credit, which will substantially improve the economics of offering childcare benefits. While both provisions take effect in 2026, year-end planning is the right moment to determine whether — and how — these benefits will factor into the new year’s package.

Trump Accounts: Updated Timing, Funding, and Employer Role

Trump Accounts, with updated guidance provided on Dec. 2 in IRS Notice 2025-68, allow parents or guardians to open a long-horizon investment account for any child under 18 with a Social Security number. Eligible children born from 2025-2028 receive a one-time $1,000 federal seed deposit — effectively free money that benefits families regardless of income. The official IRS position is that accounts will be available for enrollment in early 2026, with contributions beginning July 4, 2026. Employers will be permitted to contribute up to $2,500 per employee’s child per year, excluded from taxable income. A major recent development is the $6.25 billion philanthropic commitment from Michael and Susan Dell, which is expected to provide roughly $250 per child for millions of eligible children born before 2025 (those who are too old to receive the $1,000 seed deposit), particularly in ZIP codes with median household incomes under $150,000. This dramatically expands the number of families who will receive an initial deposit.

Pros of Trump Accounts

• Guaranteed seed deposits: A $1,000 federal contribution (and potentially $250 Dell family funded contribution) creates immediate value for employees.
• Employer-friendly benefit: Contributions are simple, capped, and excluded from taxable income.
• Long-term wealth building: Funds accumulate tax-deferred for decades, supporting financial security well into adulthood.
• Low-friction investing: Accounts must use diversified index funds, reducing decision-making complexity.

Cons of Trump Accounts

• No early access: Funds cannot be withdrawn before age 18; after that, they follow traditional IRA rules.
• Limited use cases: Not available for education or early-career expenses.
• Restricted investment menu: Only index-based options are permitted.
• Delayed implementation: Employees cannot open or fund accounts until 2026.

For now, the most valuable employer action is employee education — helping families understand eligibility and preparing them to enroll promptly once accounts become available.

Expanded Employer-Provided Childcare Credit for 2026

OBBBA meaningfully enhances the IRC §45F childcare credit beginning in 2026. Employers can claim the credit whether they operate on-site childcare, partner with a third-party provider, or subsidize employees’ childcare costs directly. Key changes include: • Credit cap increases from $150,000 to $500,000 (or $600,000 for qualifying small employers) • Credit rate increases from 25 percent to 40 percent, and potentially 50 percent for eligible small businesses • Expanded definition of qualifying expenses, now including third-party contracted childcare providers Alternatively, the OBBBA increased the Dependent Care FSA limit from $5,000 to $7,500 per household in 2026. Note that this household cap is the combined total of either employee salary-reduction contributions or any employer contributions. A Dependent Care FSA (flexible savings account) is a pre-tax account that allows employees to set aside money to pay for eligible work-related childcare expenses, such as daycare, preschool, and after-school care. These updates lower the net cost of on-site childcare, contracted center partnerships, or employer childcare subsidies — making 2026 a potential turning point for childcare benefit expansion.

Actions for Employers as 2026 Planning Begins

1. Confirm whether Trump Account contributions will be part of 2026 benefits. 2. Educate employees on eligibility, seed deposits, and expected early-2026 enrollment. 3. Assess childcare strategy in light of the expanded §45F credit and higher FSA limits. 4. Coordinate communication plans for 2026 open enrollment. 5. Evaluate small-employer status to determine enhanced credit eligibility.      

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Joe Greene is a senior manager at Evans and Bennett, LLP, a full-service accounting firm based in Syracuse. Contact him at jgreene@evansandbennett.com.