The bill introduces "Money Accounts for Growth and Advancement" (MAGA accounts), which are tax-exempt trusts designed for the exclusive benefit of an individual. These accounts aim to provide a tax-advantaged savings vehicle for children, with their earnings generally exempt from taxation. The legislation amends the Internal Revenue Code of 1986 to establish these new savings instruments.

To establish a MAGA account, the beneficiary must be under age 8, and contributions are limited to $5,000 annually, adjusted for inflation, and must be in cash. Contributions are accepted only until the beneficiary turns 18. Funds within the account must be invested in eligible investments, specifically stock of regulated investment companies that track well-established U.S. equity indices, avoid leverage, and minimize fees.

Distributions from MAGA accounts are treated differently based on their use. Amounts representing the original investment are not taxable, while income used for qualified expenses is includible in net capital gain. Qualified expenses include

higher education costs
post-secondary credentialing expenses
amounts for small business or farm loans
and the purchase of a principal residence for a first-time homebuyer

. Other distributions are fully taxable and may incur an additional 10% penalty if the distributee is under age 30.

Accounts are managed by a bank or approved trustee, and the beneficiary's interest is nonforfeitable. Assets cannot be commingled, except in common investment funds. A MAGA account ceases to exist when the beneficiary turns 31, at which point the balance is treated as distributed. Duplicate accounts for a single beneficiary are also terminated, potentially incurring an excise tax on the income portion.

The bill also establishes a MAGA Accounts Contribution Pilot Program, providing a one-time $1,000 credit from the Secretary of the Treasury for eligible individuals. This credit is directly deposited into a MAGA account for children born between December 31, 2024, and January 1, 2029, who are U.S. citizens at birth. If an eligible child does not have an account, the Secretary will establish one, notifying the parents and allowing them to decline. Taxpayers claiming this credit must provide social security numbers for themselves, their spouse, and the eligible child, with penalties for improper claims.