The One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025, creates a new, optional retirement benefit that employers may offer called “Trump Accounts.” Trump Accounts are treated like individual retirement accounts (IRAs) and can be set up for minors who are U.S. citizens with a Social Security number.
Employers are allowed to contribute up to $2,500 per year (adjusted annually for inflation) to the Trump Account of an eligible employee or employee’s dependent. The employer contribution is excluded from the employee’s gross income. A Trump account can receive contributions of up to $5,000 each year from parents, guardians, and other individuals. Employers can contribute up to $2,500 per year for an eligible employee or the employee’s dependent. Other individuals, such as a minor’s parents or the minor themselves, may also make contributions to a Trump account. The total annual contribution from any source to a Trump account is $5,000.
The OBBBA also provides a one-time, initial $1,000 Trump account contribution from the federal government for beneficiaries born between January 1, 2025, and December 31, 2028.
Contributions are permitted until the calendar year the beneficiary turns 18. When the beneficiary turns 18, the Trump account becomes a traditional IRA.
Distributions from the Trump account generally cannot be made before the year the beneficiary turns 18, with a few limited exceptions, including rollover to another Trump account, the return of excess contributions, and if the beneficiary dies before the age of 18. Distributions stemming from employer contributions are taxable when withdrawn. (Meanwhile, distributions stemming from contributions made by parents or other individuals are not taxable when withdrawn.)
For more information about the benefit updates the OBBBA provided, please see LCW’s Client Update from August 2025.
OBBBA Makes Employer Tax Credit for Paid Family and Medical Leave Permanent.
The OBBBA provides an employer tax credit for employers that provide paid family and medical leave to employees. This tax credit was previously offered on a temporary basis starting in 2017 as part of the Tax Cuts and Jobs Act (TCJA) and is provided permanently by the OBBBA.
To qualify for the tax credit, an employer must have a written policy that provides at least two (2) weeks of paid family and medical leave annually to all qualifying full-time employees (prorated for qualifying part-time employees), and the paid leave is at least 50 percent of the wages normally paid to the employee. The paid leave must be provided for the same reasons an employee would qualify and take leave under the federal Family and Medical Leave Act (FMLA). Under the law, a qualifying employee means all employees who have been employed by the employer for at least one year and whose compensation for the preceding year did not exceed 60% of the “highly compensated employee” compensation threshold set by the Internal Revenue Code ($96,000 for 2025). A full-time employee is defined as an employee customarily employed for 30 or more hours per week.
Employers who meet the OBBBA and TCJA’s paid family and medical leave requirements may seek a 12.5% tax credit on the amount of eligible wages. The tax credit percentage increases when the employer provides a paid family and medical leave benefit that exceeds 50% of the employee’s wages, up to a maximum tax credit of 25%.