[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3407 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 3407
To amend the Internal Revenue Code of 1986 to exempt money accounts for
growth and advancement from taxation, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 14, 2025
Mr. Moore of Utah introduced the following bill; which was referred to
the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exempt money accounts for
growth and advancement from taxation, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; ETC.
(a) Short Title.--This Act may be cited as the ``Money Accounts for
Growth and Advancement Act'' or the ``MAGA Act''.
(b) References.--Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Internal Revenue Code of 1986.
SEC. 2. MAGA ACCOUNTS.
(a) In General.--Subchapter F of chapter 1 is amended by adding at
the end the following new part:
``PART IX--MAGA ACCOUNTS
``SEC. 530A. MAGA ACCOUNTS.
``(a) General Rule.--A MAGA account shall be exempt from taxation
under this subtitle. Notwithstanding the preceding sentence, such
account shall be subject to the taxes imposed by section 511 (relating
to imposition of tax on unrelated business income of charitable
organizations).
``(b) MAGA Account.--For purposes of this section--
``(1) In general.--The term `money account for growth and
advancement' or `MAGA account' means a trust created or
organized in the United States for the exclusive benefit of an
individual and which is designated (in such manner as the
Secretary shall prescribe) at the time of the establishment of
the trust as a MAGA account, but only if the written governing
instrument creating the trust meets the following requirements:
``(A) The individual establishing the account shall
provide to the trustee the social security number of
such individual and of the account beneficiary.
``(B) Except in the case of a qualified rollover
contribution described in subsection (e), no
contribution will be accepted--
``(i) before January 1, 2026,
``(ii) unless it is in cash,
``(iii) unless the account beneficiary has
not attained age 18, and
``(iv) if such contribution would result in
aggregate contributions for the taxable year
exceeding the contribution limit specified in
subsection (c)(1).
``(C) No distribution (other than a distribution of
a qualified rollover contribution) will be allowed--
``(i) before the date on which the account
beneficiary attains age 18, or
``(ii) in the case of such an account the
account beneficiary of which has not attained
age 25, if the aggregate distributions from
such account exceeds the amount that is \1/2\
the cash equivalent value of the account on the
date on which the account beneficiary attains
age 18.
``(D) The account beneficiary has not attained age
8 on the date of the establishment of the account.
``(E) The trustee is a bank (as defined in section
408(n)) or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
that person will administer the trust will be
consistent with the requirements of this section or who
has so demonstrated with respect to any individual
retirement plan.
``(F) The interest of an individual in the balance
of his account is nonforfeitable.
``(G) The assets of the trust shall not be
commingled with other property except in a common trust
fund or common investment fund.
``(H) No part of the trust funds will be invested
in any asset other than eligible investments.
``(2) Eligible investments.--The term `eligible
investments' means stock of a regulated investment company
(within the meaning of section 851) which--
``(A) tracks a well-established index of United
States equities (or which invests in an equivalent
diversified portfolio of United States equities),
``(B) does not use leverage,
``(C) minimizes fees and expenses, and
``(D) meets such other criteria as the Secretary
determines appropriate for purposes of this section.
``(3) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the MAGA account was
established.
``(c) Treatment of Contributions.--
``(1) Contribution limit.--The contribution limit for any
taxable year is $5,000.
``(2) Contributions from tax exempt sources and rollover
contributions.--The amount contributed to a MAGA account for
purposes of paragraph (1) shall be determined without regard
to--
``(A) a qualified rollover contribution,
``(B) any contribution from the Federal Government
or any State, local, or tribal government, or
``(C) any contribution made through the program
established under subsection (l).
``(3) Cost-of-living adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2026, the $5,000
amount under paragraph (1) shall be increased by an
amount equal to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for the
calendar year, determined by substituting
`calendar year 2025' for `calendar year 2016'
in subparagraph (A)(ii) thereof.
``(B) Rounding.--If any increase under subparagraph
(A) is not a multiple of $100, such amount shall be
rounded to the next lower multiple of $100.
``(d) Distributions.--
``(1) Amounts allocable to investment in the contract.--A
distribution from a MAGA account of an amount allocable to the
investment in the contract shall not be includible in the gross
income of the distributee.
``(2) Amounts allocable to income on the contract used for
qualified expenses.--A distribution from a MAGA account of an
amount allocable to income on the contract and which is used
exclusively to pay for qualified expenses shall be includible
in net capital gain of the distributee under section 1(h)(12).
``(3) Amounts includible in gross income.--Any distribution
from a MAGA account which is not described in paragraph (1) or
(2) shall be includible in the gross income of the distributee.
``(4) Qualified expenses.--For purposes of this subsection,
the term `qualified expenses' means any of the following
expenses paid or incurred for the benefit of the account
beneficiary:
``(A) Qualified higher education expenses (as
defined in section 529(e)(3)) determined without regard
to section 529(c)(7).
``(B) Qualified post-secondary credentialing
expenses (as defined in section 529(f)).
``(C) Under regulations provided by the Secretary,
amounts paid or incurred with respect to any small
businesses for which the beneficiary has obtained any
small business loan, small farm loan, or similar loan.
``(D) Any amount used for the purchase (as defined
in section 36(c)(3)) of the principal residence (as
used in section 121) of the account beneficiary if such
account beneficiary is a first-time homebuyer (as
defined in section 36(c)(1)) with respect to such
purchase.
``(5) Exceptions.--Paragraphs (2) and (3) shall not apply
to any distribution which is a qualified rollover contribution.
``(6) Additional tax on certain distributions.--In the case
of a distributee who has not attained age 30, the tax imposed
by this chapter on the account beneficiary for any taxable year
in which there is a distribution from a MAGA account of such
beneficiary which is includible in gross income under paragraph
(3) shall be increased by 10 percent of the amount which is so
includible.
``(e) Qualified Rollover Contribution.--For purposes of this
section, the term `qualified rollover contribution' means an amount
which is paid in a direct trustee-to-trustee transfer from a MAGA
account maintained for the benefit of the account beneficiary to a MAGA
account maintained for such beneficiary.
``(f) Treatment After Death of Account Beneficiary.--Rules similar
to the rules of section 223(f)(8) shall apply for purposes of this
section.
``(g) Determinations of Aggregate Distributions and Investment in
Contract in the Case of Certain Rollover Contributions.--In the case of
a qualified rollover contribution which is described in subsection
(e)(2), any determination required under this section of the amount of
the investment of the contract or of aggregate distributions from the
MAGA account shall be determined with respect to the aggregate of such
amounts for all MAGA accounts of the same account beneficiary.
``(h) Custodial Accounts.--For purposes of this section, a
custodial account shall be treated as a trust under this section if--
``(1) the custodial account would, except for the fact that
it is not a trust, constitute a trust which meets the
requirements of subsection (b)(1), and
``(2) the assets of such account are held by a bank (as
defined in section 408(n)) or another person who demonstrates,
to the satisfaction of the Secretary, that the manner in which
he will administer the account will be consistent with the
requirements of this section.
For purposes of this title, in the case of a custodial account treated
as a trust by reason of the preceding sentence, the person holding the
assets of such account shall be treated as the trustee thereof.
``(i) Termination.--
``(1) Age 31.--Upon the date on which the account
beneficiary attains age 31, a MAGA account shall cease to be a
MAGA account and the amount in such account shall be treated as
distributed for purposes of subsection (d).
``(2) Multiple accounts of one beneficiary.--
``(A) In general.--In the case of any duplicate
MAGA account of any account beneficiary other than a
MAGA account which is established by the deposit
through a qualified rollover contribution of the entire
amount of another MAGA account of the account
beneficiary--
``(i) such duplicate MAGA account shall
cease to be a MAGA account and the amount in
such account shall be treated as distributed
for purposes of subsection (d), and
``(ii) there is imposed an excise tax on
the account beneficiary in an amount equal to
so much of cash value of the account as is
allocable to income on the contract.
``(B) Withholding requirement.--In the case of an
account terminated under subparagraph (A), the trustee
shall deduct and withhold upon the amount to be
distributed the amount in excess described in
subparagraph (A)(ii).
``(C) Notification.--The Secretary, upon
determining that a duplicate account exists, shall
provide a notice to the account beneficiary of such
duplicate account (and the account custodian, in the
case of a custodial account) and to each trustee of any
MAGA account of the account beneficiary of such
duplicate account which identifies each MAGA account of
such beneficiary and the trustee of each such account.
``(D) Duplicate account.--For purposes of this
paragraph, the term `duplicate account' means--
``(i) in the case of an account beneficiary
for the benefit of whom an account was
established by the Secretary under section
6434, any other MAGA account of such account
beneficiary, or
``(ii) in the case of any other account
beneficiary, any MAGA account established after
the first MAGA account established for the
benefit of such account beneficiary.
``(j) Investment in the Contract.--For purposes of this section,
rules similar to the rules applied to a qualified tuition program (as
defined in section 529(b)) under section 72(e)(9) shall apply for
purposes of determining the investment in the contract, except that
such amount shall be determined without regard to any contribution
which is described in subsection (c)(2).
``(k) Reports.--The trustee of a MAGA account shall make such
reports regarding such account to the Secretary and to the beneficiary
of the account with respect to contributions, distributions, the amount
of investment in the contract, and such other matters as the Secretary
may require. The reports required by this subsection shall be filed at
such time and in such manner and furnished to such individuals at such
time and in such manner as may be required.
``(l) Contributions to Predominately Unrelated Children.--The
Secretary shall establish a program through which contributions may be
made to the MAGA accounts of a large group of account beneficiaries
if--
``(1) the contribution is made by any person described in
any paragraph of section 501(c) and exempt from taxation under
section 501(a),
``(2) such accounts are selected on the basis of the
location of the residence of the account beneficiaries, the
school district in which such beneficiaries attend school, or
another basis the Secretary determines appropriate, and
``(3) all individuals who are account beneficiaries of such
an account who meet the selected criteria receive an equal
portion of the contribution.''.
(b) Distribution Taxed at Same Rate as Net Capital Gains.--Section
1(h) is amended by adding at the end the following new paragraph:
``(12) Distributions from maga account taxed as net capital
gain.--For purposes of this subsection, the term `net capital
gain' means the net capital gain (determined without regard to
this paragraph) increased by the amount includible in net
capital gain under this paragraph by reason of section
530A(d)(2).''.
(c) Tax on Excess Contributions.--
(1) In general.--Section 4973(a) is amended by striking
``or'' at the end of paragraph (5), by inserting ``or'' at the
end of paragraph (6), and by inserting after paragraph (6) the
following new paragraph:
``(7) a MAGA account (as defined in section 530A(b)),''.
(2) Excess contribution.--Section 4973 is amended by adding
at the end the following new subsection:
``(i) Excess Contributions to a MAGA Account.--For purposes of this
section, in the case of MAGA accounts (within the meaning of section
530A), the term `excess contributions' means the sum of--
``(1) the amount by which the amount contributed for the
calendar year to such account (other than qualified rollover
contributions (as defined in section 530A(e))) exceeds the
contribution limit under section 530A(c)(1) (determined without
regard to contributions described in section 530A(c)(2)), and
``(2) the amount determined under this subsection for the
preceding calendar year, reduced by the excess (if any) of the
maximum amount allowable as a contribution under section
530A(c)(1) (as so determined) for the calendar year over the
amount contributed to the account for the calendar year (other
than qualified rollover contributions (as so defined)).''.
(d) Disclosure of Return Information To Facilitate Certain
Contributions.--Section 6103(l) is amended by adding at the end the
following new paragraph:
``(23) Disclosure of return information to enable certain
contributions to maga accounts.--Upon written request signed by
the head of the bureau or office of the Department of the
Treasury requesting the inspection or disclosure, the Secretary
may disclose the following return information with respect to a
MAGA account (as defined in section 503A(b)) to officers and
employees of such bureau or office to the extent that such
disclosure is necessary to carry out section 530A(l):
``(A) Information necessary to identify the account
holders in a particular class of beneficiaries
identified by a donor as the intended recipients.
``(B) The name, address, and social security number
of a beneficiary.
``(C) The account custodian and the address of such
custodian.
``(D) The account number.
``(E) The routing number.
``(F) To the extent determined by the Secretary in
regulations, such other return information as the
Secretary determines necessary to ensure proper routing
of funds.
Return information disclosed under this paragraph may only be
used to identify account holders in a particular class of
beneficiaries or for the proper routing of funds and may not be
redisclosed by the Secretary.''.
(e) Failure To Provide Reports on MAGA Accounts.--Section
6693(a)(2) is amended by striking ``and'' at the end of subparagraph
(E), by striking the period at the end of subparagraph (F) and
inserting ``, and'', and by adding at the end the following new
subparagraph:
``(G) section 530A(h) (relating to MAGA
accounts).''.
(f) Conforming Amendment.--The table of parts for subchapter F of
chapter 1 is amended by adding at the end the following new item:
``Part IX. MAGA Accounts''.
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2024.
SEC. 3. MAGA ACCOUNTS CONTRIBUTION PILOT PROGRAM.
(a) In General.--Subchapter B of chapter 65 is amended by adding at
the end the following new section:
``SEC. 6434. MAGA ACCOUNTS CONTRIBUTION PILOT PROGRAM.
``(a) In General.--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.
``(b) Account Established by Secretary.--
``(1) In general.--In the case of any eligible individual
that the Secretary determines is not the account beneficiary of
any MAGA account as of the qualifying date of such eligible
individual, the Secretary shall establish an account for the
benefit of such eligible individual.
``(2) Qualifying date.--For purposes of paragraph (1), the
term `qualifying date' means, with respect to an eligible
individual, the first date on which a return of tax is filed by
an individual with respect to whom such eligible individual is
a qualifying child with respect to the taxable year to which
such return relates.
``(3) Notification.--In the case of any eligible individual
for the benefit of whom the Secretary establishes an account
under paragraph (1), the Secretary shall--
``(A) notify any individual with respect to whom
such eligible individual is a qualifying child for the
taxable year described in paragraph (2) of the
establishment of such account, and
``(B) shall provide an opportunity to such
individual to elect to decline the application of this
subsection to such qualifying child.
``(4) Determination of default trustee.--For purposes of
selecting a trustee for an account established under paragraph
(1), the Secretary shall take into account--
``(A) the history of reliability and regulatory
compliance of such trustee,
``(B) the customer service experience of such
trustee,
``(C) the costs imposed by such trustee on the
account or account beneficiary, and
``(D) to the extent practicable, the preferences of
any individual described in paragraph (3)(A) with
respect to such eligible individual.
``(c) Eligible Individual.--For purposes of subsection (a), the
term eligible individual means an individual--
``(1) who is born after December 31, 2024, and before
January 1, 2029, and
``(2) who is a United States citizen at birth.
``(d) Social Security Number Required.--
``(1) In general.--No credit shall be allowed under
subsection (a) to a taxpayer unless such taxpayer includes on
the return of tax for the taxable year--
``(A) such individual's social security number,
``(B) if such individual is married, the social
security number of such individual's spouse, and
``(C) the social security number of the eligible
individual with respect to whom such credit is allowed.
``(2) Social security number defined.--For purposes of
paragraph (1), the term `social security number' shall have the
meaning given such term in section 24(h)(7).
``(e) Definitions.--For purposes of this section--
``(1) Qualifying child.--The term qualifying child has the
meaning given such term in section 152(c).
``(2) MAGA account; account beneficiary.--The terms `MAGA
account' and `account beneficiary' have the meaning given such
terms in section 530A(b).''.
(b) Penalty for Negligent Claim or Fraudulent Claim.--Part I of
subchapter A of chapter 68 of subtitle F is amended by adding at the
end the following new section:
``SEC. 6659. IMPROPER CLAIM FOR MAGA ACCOUNT CONTRIBUTION PILOT PROGRAM
CREDIT.
``(a) In General.--In the case of any taxpayer that makes an
excessive claim for a credit under section 6434--
``(1) if such excess is a result of negligence or disregard
of the rules or regulations, there shall be imposed a penalty
of $500, or
``(2) if such excess is a result of fraud, there shall be
imposed a penalty of $1,000.
``(b) Definitions.--The terms `negligence' and `disregard' have the
same meaning as when such terms are used in section 6662.''.
(c) Omission of Correct Social Security Number Treated Mathematical
or Clerical Error.--Section 6213(g)(2) is amended by striking ``and''
at the end of subparagraph (U), by striking the period at the end of
subparagraph (V) and inserting ``, and'', and by inserting after
subparagraph (V) the following new subparagraph:
``(W) an omission of a correct social security
number required under section 6434(d)(1) (relating to
the MAGA accounts contribution pilot program).''.
(d) Clerical Amendments.--
(1) The table of sections for subchapter B of chapter 65 is
amended by adding at the end the following new item:
``Sec. 6434. MAGA accounts contribution pilot program.''.
(2) The table of sections for part I of subchapter A of
chapter 68 of subtitle F is amended by inserting after the item
relating to section 6658 the following new item:
``Sec. 6659. Improper claim for MAGA account contribution pilot program
credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2024.
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