119-hr3407

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3407 Introduced in House

    (IH) ]

<DOC>

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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