IRS proposes rules on Trump account contributions and dependent-care nondiscrimination

The Internal Revenue Service issued a notice of proposed rulemaking (Reg. 101355-26; FR Doc No 2026-16314) that would codify guidance for employer contributions to Trump accounts under section 128 and for nondiscrimination requirements of dependent-care assistance programs under section 129 of the Internal Revenue Code. The proposals bind any employer that maintains a Trump account contribution program or a dependent-care assistance program and the employees who participate in those plans.

For Trump accounts, the proposed regulations would confirm that employer contributions are excludable from an employee's gross income up to $2,500 per calendar year, with inflation adjustments beginning after 2027. The exclusion applies per employee, not per dependent, and the special rules governing contributions, investments, distributions, and reporting apply only through the "growth period," which ends on December 31 of the year the account beneficiary turns 17.

Dependent-care assistance programs would continue to allow an exclusion of up to $7,500 per employee annually ($3,750 for married individuals filing separate returns), provided the plan satisfies four nondiscrimination tests: contributions and benefits, eligibility, owner concentration, and average benefits. The owner concentration rule limits payments to shareholders or owners who own more than 5 percent to no more than 25 percent of total amounts paid. The average benefits rule requires that average benefits to non-highly compensated employees be at least 55 percent of those to highly compensated employees. A salary-reduction exception permits disregarding employees earning less than $25,000.

Comments must be submitted electronically by September 25 2026, and a public hearing is scheduled for October 15 2026 at 10 a.m. ET, with requests to speak due by the same September deadline. Contact information for the IRS includes Jennifer Friedman (202) 317-5500 for regulatory questions and the Publications and Regulations Section (202) 317-6901 for hearing logistics.

Compliance officers should review the draft language to assess whether existing plans meet the proposed thresholds and nondiscrimination criteria, and consider submitting comments to shape the final regulations before they become effective for taxable years beginning after December 31 2025.