IRS Provides Gift Tax Safe Harbor for Trump Account Contributions — Implications for Cross-Border Donors

Summary

On June 29, 2026, the Treasury and IRS issued Revenue Procedure 2026-25, establishing a safe harbor for certain contributions to Trump Accounts — accounts created under the Working Families Tax Cuts. The safe harbor allows qualifying cash contributions to be treated under the annual gift tax exclusion, meaning donors can make contributions up to the annual limit without filing a gift tax return. To qualify, the contribution must be in cash, fall within the applicable annual exclusion amount, and be made to a properly defined beneficiary or account. The donor must retain no control over the contributed amount. This guidance provides a clear compliance pathway for donors who wish to participate.

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Our Take

For high-net-worth individuals with Canada-US exposure, this safe harbor simplifies a historically murky area. Canadians who gift to US-resident family members often find themselves caught between Canada's absence of a gift tax and the US's detailed reporting requirements. The Trump Account safe harbor brings clarity for smaller, qualifying gifts — donors can proceed with confidence that no gift tax return is needed. However, the safe harbor does not extend to contributions exceeding the annual exclusion, nor does it cover in-kind gifts. Larger cross-border gifting structures still require careful US-Canada coordination, particularly given CRA's attribution rules and potential deemed disposition consequences.

Disclaimer: This article is general information only and does not constitute tax advice; it should not substitute professional tax counsel. Please consult a licensed CPA for advice specific to your situation.