Children of Non-Citizens Could Be Eligible for $1,000 ‘MAGA’ Account

Congressional Republicans have introduced a new proposal backed by President Donald Trump to create “MAGA” (Money Account for Growth and Advancement) accounts —tax-advantaged savings plans for children—and it’s possible that children of non-citizens could qualify.

Newsweek reached out to the Social Security Administration (SSA) for comment.

Why It Matters

The plan is part of a broader GOP-led effort to extend and expand portions of the 2017 Tax Cuts and Jobs Act, with the MAGA accounts, the name a play on Trump’s Make America Great slogan, serving as a centerpiece to boost financial preparation for American youth. The timeline for eligibility window is also directly linked to President Donald Trump’s second term.

Supporters argue that the MAGA accounts would help American families accumulate wealth and prepare their children for education, housing and retirement needs, while others have said it won’t be enough to address inequality.

What To Know

The initiative is included in a sweeping tax plan titled the “THE ONE, BIG, BEAUTIFUL BILL” released by the House Ways and Means Committee. The legislation sparked protests but passed its portion of the tax plan early Wednesday morning after a marathon session.

MAGA accounts would allow families to contribute up to $5,000 each year on behalf of their children. Contributions would grow tax-deferred, and could be used for various life expenses, including education or purchasing a home.

When the money is taken out, it would be subject to capital-gains taxes and can’t be distributed until the child is 18 years old.

The bill states the following: “In the case of any taxpayer with respect to whom an eligible individual is a qualifying child, there shall be allowed a one-time credit of $1,000 with respect to each such eligible individual who is a qualifying child of such taxpayer which shall be payable by the Secretary only to the MAGA account with respect to which such eligible individual is the account beneficiary.”

Per the bill, to be eligible, a child has to be a citizen at birth and the taxpayer who claims the child as a dependent needs a Social Security Number (SSN)—and if they’re married, their spouse does too.

Currently, guidelines stipulated by the Social Security Administration say that only citizens, and noncitizens who are authorized to work in the U.S. by the Department of Homeland Security (DHS) can get an SSN, to report wages and to determine eligibility for Social Security benefits.

“You need an SSN to work, collect Social Security benefits, and receive certain government services,” the SSA says. “Lawfully admitted noncitizens can get certain benefits and services without an SSN. You don’t need an SSN to get a driver’s license, register for school, get private health insurance, or apply for school lunch programs or subsidized housing.

“Some organizations use your SSN to identify you in their records. Most, however, will identify you by some other means if you request it.”

However, experts warn that the citizenship restrictions will drastically reduce who is eligible for the federal benefits, while the $1,000 incentive is just “a drop in the bucket” in comparison with the cost of raising a child in the United States.

“Just think about it. I have kids, I have 3-year-old, I have two older kids,” Will McBride, chief economist at the Tax Foundation, told Newsweek on Wednesday. “They cost a fortune, and they cost a fortune in terms of my time, they cost a fortune in terms of of my money, and $1,000 is a drop in the bucket.

“It’s $1,000 lest all the cost of figuring out how the thing works and taking on the risk of making a mistake and the IRS [Internal Revenue Service] coming after you, and there’s a 10 percent penalty if you withdraw at the wrong time under the wrong conditions. … In the grand scheme of things, there’s so many other incentives in the tax code that people already don’t take advantage of. I suspect this will get lost in the shuffle.”

He said the U.S. already has income tax, 401k’s, IRA’s, all sorts of specialized savings accounts for different things like health expenditures, and education savings accounts.

“And it just goes on and on…it gets to be pretty confusing,” McBride said. “Most people have no awareness of that. They can’t even keep track of the tax rates that apply and… different brackets for capital gains and dividends.”

It’s also possible companies could offer options for employee matching programs to help bolster the accounts.

American Action Forum President Douglas Holtz-Eakin told Newsweek that the SSN and citizen-at-birth restrictions are signatures of the “America First” imperative, aimed to narrow the eligibility of foreign-born individuals for federal benefits.

“Mechanically, this will reduce take-up of the MAGA accounts and lower the budget cost, “Holtz-Eakin said. “As for the accounts, other than the $1,000 from the taxpayer, they are not very attractive. A Roth IRA also uses after-tax dollars for additional contributions, but does not face a capital gains tax on distributions. I don’t see MAGA accounts being much of a saving vehicle.”

Altimeter Capital CEO Brad Gerstner told CNBC on Tuesday that it was “absolutely critical” that CEOs of larger companies contribute to the accounts of the kids of their employees.

Senator Ted Cruz of Texas, who met with CEOs at the Milken Ideas Conference last week, told Semafor on Monday that employers see it as a “very attractive benefit” for employees to either match or make contributions regardless of matching similar to a 401K.

What People Are Saying

President Donald Trump said on Truth Social: “When I return from the Middle East, where great things will happen for America, we will work together on any and all outstanding issues, but there shouldn’t be many — The Bill is GREAT.”

Senator Ted Cruz told Semafor: “What is powerful is enabling every child in America to have an investment account and a stake in the American free enterprise system.”

Senate Minority Leader Dick Durbin told Semafor: “Even a stopped watch is right twice a day.”

Gerstner told CNBC on Tuesday, “3.7 million children are born in the U.S. every year. If you see them all with $1,000 in the S&P 500, that’s $3.7 billion every year—less than the cost of a single weapons system that we have in our military. It’s a tiny amount of money to get every child in America in the game.”

What’s Next

Other House committees are expected to take up their portions of the tax plan in the hope of passing it and bringing it to the floor for a vote by Speaker Mike Johnson’s self-imposed Memorial Day deadline. While Republicans have majorities in both the House and the Senate, they’ll need Democrats to pass the tax plan.