“To amend the Internal Revenue Code of 1986 to exempt money accounts for growth and advancement from taxation, and for other purposes.”
No CRS summary available for this bill.
This section designates the short title of the Act as the “Money Accounts for Growth and Advancement Act” (MAGA Act) and specifies that amendments or repeals refer to provisions of the Internal Revenue Code of 1986 unless otherwise provided.
This section establishes MAGA accounts (i.e., money accounts for growth and advancement) as tax-exempt trusts under new IRC §530A for the exclusive benefit of an account beneficiary under age 8 at establishment. Contributions of up to $5,000 per taxable year (adjusted annually for inflation after 2026) in cash are permitted starting January 1, 2026, and before the beneficiary attains age 18 (excluding qualified rollovers and contributions from federal, state, local, or tribal governments or under a designated program); assets must be invested solely in specified low-cost, unleveraged regulated investment companies tracking established U.S. equity indexes. Distributions before age 18 are prohibited except for qualified rollovers; for beneficiaries under age 25, aggregate distributions are limited to one-half the account's cash-equivalent value at age 18; contribution amounts are nontaxable, earnings used for qualified expenses (i.e., higher education expenses, post-secondary credentialing expenses, small business or farm loans, or first-time homebuyer principal residence purchase) are includible in net capital gain, and other amounts are includible in gross income.
This section establishes the MAGA accounts contribution pilot program (new IRC §6434), under which the IRS provides a one-time $1,000 credit—deposited directly into a MAGA account (as defined in IRC §530A(b))—for each eligible individual who is a qualifying child (per IRC §152(c)) of the taxpayer. Eligible individuals are U.S. citizens born after December 31, 2024, and before January 1, 2029; if no MAGA account exists for such an individual by the date the first relevant tax return is filed, the Secretary must establish one (notifying the parent or guardian, who may elect to decline), selecting a trustee based on reliability, compliance, customer service, costs, and parental preferences. The section further (1) requires taxpayers to include Social Security numbers on returns to claim the credit; (2) imposes a $500 penalty for negligent excessive claims and a $1,000 penalty for fraudulent claims (new IRC §6659); and (3) treats omission of a required Social Security number as a mathematical or clerical error (amending IRC §6213(g)(2)). The amendments apply to taxable years beginning after December 31, 2024.