​A purchase made during the holiday that gets returned or exchanged after the holiday generally will not be required to pay the sales tax that was previously exempt. For additional details, take a look at the Frequently Asked Questions posted by the Massachusetts Department of Revenue.  
 
While most people are familiar with sales tax, few people know about use tax. Use tax generally applies when taxable items are purchased without paying sales tax and are then used, stored, or consumed in a state. Both individuals and businesses may be subject to use tax.
 
The purpose of use tax is to ensure that purchases are taxed similarly regardless of where they are made. Each state has its own percentage of use tax which tends to be the same percentage as the state’s sales tax. It is important to note that states that do not have sales tax, like New Hampshire, generally do not have use tax.
 
For example, Massachusetts has a 6.25% use tax on qualifying out of state purchases that are brought into Massachusetts or on taxable online purchases where no Massachusetts sales tax was collected. Individuals are responsible for paying directly to the Massachusetts Department of Revenue (DOR) or annually on their Massachusetts income tax return. Businesses that are registered in Massachusetts are generally responsible for tracking and remitting any applicable use tax and paying it to the DOR. To learn more about use tax in Massachusetts, take a look at these resources: Massachusetts Individual Use Tax and Sales and Use Tax.

For the first half of 2026 the mileage rates are as follows:

Business $0.725/mile
Medical/Moving $0.205/mile
Charitable $0.14/mile, note that this rate is fixed by law
 
For the second half of 2026 the mileage rates are increasing to the following amounts:

Business $0.76/mile
Medical/Moving $0.235/mile
 
In some cases business owners calculate actual vehicle costs rather than using the above noted standard mileage rates. If you use the actual costs method, you would have already seen an increase in your business costs.
 
For more information on this change, take a look at the IRS Revenue Bulletin and to learn more about the actual costs method vs standard costs method, take a look at our 2019 article, Getting the Most Out of Your Business Vehicles Expenses.

The $1,000 seed genuinely is free money and you should claim it. Employer contributions under the new Section 128 are a real benefit, and there is a narrow set of families for whom this account’s rigidity is precisely the point. But funding one with your own after-tax dollars is, for most families willing to run the alternative, a worse deal than the boring custodial brokerage account that’s been sitting there the whole time. The tax mechanics explain why, and they also explain the exceptions.

What you're actually signing up for
A Trump Account is a traditional IRA for a minor, with extra restrictions. Contributions are after-tax (no deduction). The money is locked until January 1 of the year the child turns 18 with no exceptions, not even under circumstances that normally crack open a retirement account. Investments are limited to low-cost U.S. equity index funds. Contributions from all private sources including parents, grandparents, and employers are capped at $5,000 per year in the aggregate, indexed after 2027. The $1,000 federal seed does not count against that cap.
Then, at 18, it converts to ordinary traditional IRA treatment. And that is where the problem lies.
The initial $1,000 seed, all employer contributions, and every dollar of growth comes out taxed as ordinary income. Not capital gains. Ordinary income. And if your now-adult child withdraws before age 59½, add a 10% early withdrawal penalty on top, subject to the usual narrow exceptions.
Read that again in context: this account is marketed to parents of newborns as a way to give kids "a head start." A head start on what? The earliest penalty-free access to the growth is more than half a century away. If your child taps it at 22 to start a business, cover a wedding, or bridge a career change, they'll pay their marginal ordinary rate plus 10% on the earnings. The penalty is waived for qualified higher education costs and for the first $10,000 toward a first home. But even then, every dollar is still coming out taxed at ordinary rates, in the exact years a young adult's dollars matter most.

The conversion you didn't ask for
Here's the part that should bother you most; If you bought and held an S&P 500 index fund in a regular taxable account for 18+ years, nearly all of your return would be long-term capital gain and be taxed at 0%, 15%, or 20%. A Trump Account takes that same return and converts it into ordinary income taxed at rates up to 37%, in exchange for deferral whose value depends entirely on the money never being needed.
Deferral has value when it lets you arbitrage tax rates downward; contribute at a high rate, withdraw at a low one. That’s the entire logic of a 401(k). A Trump Account funded with your own after-tax dollars runs the arbitrage backwards: no deduction going in, and a higher rate category coming out. (Employer contributions under Section 128 are the exception, as those do come with an exclusion, and they change the analysis entirely. More on that below.) The deferral on dividends along the way is real but small, as an index fund yields under 1.5%, and a child’s dividend income usually sits under the kiddie tax threshold anyway. Can six decades of uninterrupted compounding eventually outrun a worse exit rate? Sometimes, narrowly — the projections below give deferral its full due, and it earns honest points on the longest paths. But it only gets the chance on the path where nobody ever touches the money.

The alternative: a custodial account and a little patience
Compare the path I'd recommend for most families looking to maximize the “head start” angle of a Trump Account: open a UTMA custodial brokerage account, buy the same index fund, and hold.
While the child is a minor, the kiddie tax shelters roughly the first $2,700 of unearned income per year (half tax-free, half at the child's rate), which comfortably covers the dividends on a six-figure balance. The account is accessible the entire time if the child genuinely needs the money as it’s the custodian who controls it, not a statute.
Then comes the payoff window. Once the kiddie tax stops applying (more on the timing below), the child likely sits in the 0% long-term capital gains bracket (in 2026, taxable income up to $49,450 for a single filer). The standard deduction ($16,100 in 2026) stacks on top: a child with no other income can realize roughly $65,500 of long-term gain in a single year at a 0% federal rate. Each year, you harvest: sell appreciated shares, recognize the gain at 0%, and repurchase immediately — there's no wash sale rule for gains, so basis resets at no tax cost. Repeat annually through the early-to-mid 20s.
By 25, the child has a brokerage account with a cost basis built up to nearly the full balance, no embedded tax liability, no withdrawal restrictions, no penalties, and no strings. They can use it for a house, a wedding, a business, retirement, or nothing at all. That flexibility is worth a great deal, and the tax cost of acquiring it was approximately zero.

An honest caveat on timing: the kiddie tax doesn't automatically die at 18. It applies to children under 18; to 18-year-olds whose earned income doesn't exceed half of their own support; and to full-time students ages 19 through 23 whose earned income doesn't exceed half of their support. Starting in the year the child turns 24, it's gone regardless. During the years it applies, the 2026 structure works like this: the first $1,350 of unearned income is tax-free, the next $1,350 is taxed at the child's own rates, and everything above $2,700 is taxed at the parents' marginal rate. For long-term gains, that's better than it sounds, as both child-rate slices land at the child's 0% capital gains rate, so roughly $2,700 of gain still comes out tax-free every year, and any overage is taxed at the parents' 15% or 20% capital gains rate, not ordinary rates. So the practical map: harvest ~$2,700 annually from birth onward, watch for any year the child works enough to escape kiddie tax status (a kid earning more than half their own support at 18+ is out), and plan the heavy six-figure harvesting for the years after college or after the year they turn 24. The window is narrower than the "18 to 25" shorthand suggests, but it's wide enough that two or three clean years at ~$65,000 of gain each can make a lot of difference.

And an honest caveat on control: a UTMA is a one-way gift too. Contributions are irrevocable, and in New Hampshire the account becomes the child’s outright at 21, regardless of whoever they’ve turned out to be by then. That is a real risk, not a rhetorical one. A 21-year-old with unrestricted access to a six-figure account and imperfect judgment is a common enough outcome that some families should plan around it rather than hope past it. The textbook answer is a trust, and for larger balances the textbook is right. But trusts cost money to draft and administer, and for a family whose account will never justify that expense, the Trump Account’s lockup is not a defect, it’s actually the product. If what you want is money your child cannot reach until they are old enough to have stopped being the person you were worried about, this account delivers exactly that, and none of the alternatives below do.

And one honesty check against my own recommendation. The custodial strategy above is not passive. It assumes someone actually sells and rebuys every year for twenty-five consecutive years, tracks basis across those transactions, files a return for the child in the years one is required, and monitors kiddie tax status — all without the automation a locked account provides for free. It also assumes the child’s own earnings leave 0% bracket room to harvest into; a graduate who walks into six figures at 23 has none, and the window closes early. The Trump Account has one condition attached to it. The custodial plan has several, and they recur annually.
One more wrinkle worth knowing, and it cuts both ways. UTMA assets count as the student’s on the FAFSA. Trump Accounts are retirement accounts and are excluded from the asset calculation entirely. But a Trump Account distribution taken for education lands in the student’s income, and student income is assessed more aggressively than any asset on the form. Before either account drives a decision, be clear on how the FAFSA treats parental versus student income and assets, and in which years each is measured.

Let's run a scenario
Same family, same dollars, two lanes. Assume $5,000 contributed at the start of each year from birth through age 17. This would be $90,000 in today's dollars, tracking the Trump Account's inflation-indexed maximum. Both lanes hold the same S&P 500 index fund returning 10% a year (8.5% price appreciation, 1.5% qualified dividends — the index's long-run nominal average). The child is a full-time student through 22, earns $60,000 from 23 to 29, and $100,000 after that, in today's dollars. Single filer, New Hampshire resident (no state tax), all taxes paid from the account in both lanes, and the $1,000 seed excluded from both so we're comparing your dollars only.
One modeling note, because it changes the answer and most analyses get it wrong: tax brackets are indexed to inflation, so a sixty-year projection has to index them too. We run everything at 2.5% inflation and report every figure below in 2026 purchasing power. (Two things stay frozen because Congress froze them: the $200,000 net investment income tax threshold and the $10,000 first-home penalty exception. The first quietly becomes a tax on ordinary retirees over these horizons.)
For the retirement and estate scenarios, both portfolios de-risk to a 60/40 allocation at age 50, and this is where we hand the Trump Account its best structural argument, because bonds are the one asset that genuinely belongs in a tax-deferred wrapper. The IRA holds taxable bonds at a 5% yield, fully deferred, for a blended 8.0% return. The brokerage does the tax-smart equivalent and holds municipal bonds at 3.5%, for a blended 7.4% — that muni yield haircut is the implicit tax the market charges, and it's the asset-location price the taxable lane pays every year. The shift itself also costs the brokerage a one-time gain realization at 50; the IRA reallocates internally for free. Both costs are in the numbers below.
The UTMA lane runs the playbook described above: harvest gains into the kiddie-tax band each year through age 22, then fill whatever 0% bracket room the $60,000 salary leaves (about $5,500 a year in today’s dollars) through the 20s. Nothing exotic, just selling and rebuying once a year. By age 30, those harvests plus reinvested dividends have built the account’s cost basis up to roughly $131,000 against a $438,000 balance. Note what that assumes: flawless annual execution for a quarter century. The model gives the UTMA lane full credit for it. A real family may not earn it.

​Scenario one: drain the whole account at 30 for a house down payment.
Both accounts arrive at age 30 worth essentially the same — about $439,000 in today's dollars — because the UTMA's dividend drag was almost entirely absorbed by the kiddie-tax band and the 0% bracket along the way. Then the exit tax hits.

That’s a $96,000 difference in today’s dollars on identical contributions and identical investments, which is more than the entire $90,000 the family put in, recovered through account selection and an annual harvesting habit that has to actually happen, every year, for the number to hold. The Trump Account’s $386,000 of growth stacks on top of the salary as ordinary income, climbing through the 24%, 32%, and 35% brackets, and then the penalty takes another 10% of nearly all of it. The same growth in the UTMA never sees a federal rate above 20%, and most of it sees 15%.

​Scenario two: never touch it, retire on a 4% draw at 65.
This is the Trump Account's home field: tax deferral, no penalty, decades to compound, and from 50 onward, the bond sleeve sheltered at full yield while the brokerage settles for munis. Each retiree draws 4% of their own balance annually (the IRA holder switching to RMDs from 75, when those exceed 4%). Run it for the full twenty years, not just a snapshot:

Credit where due: held for sixty years, the wrapper wins. The IRA arrives at age 65 twenty five percent larger, because the brokerage spent fifteen years paying the muni haircut and the dividend drag while the IRA compounded gross. In retirement, the IRA’s draws come out at a 17–21% effective rate, which is ordinary income, yes, but ordinary income run through indexed brackets. The UTMA’s draws are taxed at only 7–9% — return of basis, a thin gain slice, tax-free muni interest — but it’s 7–9% of a smaller, slower number. Deferral on a bigger base beats efficiency on a smaller one.
The margin is about 3%, and it is thin enough that reasonable assumption changes push it either way. But it is a win, and it is earned by exactly the mechanism the account was designed around.
Then the estate leg claws most of it back. The IRA arrives at death about a million dollars larger and delivers $550,000 less to the heir, with the 10-year rule converting the entire balance into the beneficiary's ordinary income at a 34% effective rate, while the UTMA passes with a full basis step-up and a tax bill of zero. All-in, income plus legacy, the Trump Account finishes about 3% ahead; call it a draw that took six decades of perfect discipline to achieve.
(One housekeeping note: even these estates don't trigger federal estate tax. The exemption — $15 million today — is indexed too, and neither lane gets within reach of it.)

​Scenario three: the money outlives them.
One objection to the scoreboard above: the IRA "wins" the income leg partly by consuming more. From 75 onward, RMDs force larger draws, inflating its income total. So equalize consumption and see what's left. Suppose both fund an identical after-tax lifestyle from 65 to 84 (both set by the UTMA's 4% draw, roughly $117,000 a year at 65 growing to $128,000 by 84, in today's dollars) and die at 85, leaving everything to an adult child earning $200,000.
The mechanics diverge every year. Funding that lifestyle costs the UTMA holder about $1.07 of gross withdrawal per $1.00 spent. The IRA holder, paying ordinary rates on every dollar, pulls roughly $1.19 per $1.00 spent in the early years, and once RMDs arrive at 75, the required draws exceed what the lifestyle needs, with about $800,000 of forced after-tax excess accumulating in a taxable side account by death.

And here the wrapper wins outright, by about 13%. The IRA’s faster compounding simply built a big enough pile that even a 34% beneficiary haircut leaves more behind than the brokerage’s tax-free handoff. The step-up is the UTMA’s best card, and it isn’t enough: an 85-year head start at 8.0% versus 7.4% is a lot of ground to give.
That margin is sensitive to the frozen NIIT threshold, which increasingly taxes the brokerage’s retirement income as the decades pass. Index that threshold and the IRA’s edge shrinks to about 4%. It doesn’t flip.
Add it up across the three scenarios and the scoreboard is more interesting than a clean sweep. Used young, the Trump Account loses badly: a 35% haircut against 13%, a $96,000 hole on a $90,000 investment. Held untouched to retirement, it wins by about 3%. Taken all the way to death, it hands the next generation about 13% more. Two of three go to the wrapper.
What separates them is not tax rates, but conditions. The Trump Account’s condition is singular and severe: the money is never needed before 59½. No down payment, no career break, no business opportunity, no year where access would have mattered. The custodial account’s conditions are milder but plural and recurring: the harvesting actually gets done, every year, for twenty-five years; the child’s income leaves bracket room to harvest into; and a 21-year-old with unrestricted access leaves the balance alone. Neither lane is free. The real question is which set of conditions your family is more likely to satisfy, and that answer is different for different families, which is most of the point.

If the goal is education, this isn't close
For college funding specifically, the 529 wins and it isn’t a contest. Tax-free growth and tax-free withdrawals for qualified education expenses, high contribution limits, parental control retained indefinitely, favorable financial aid treatment as a parental asset, and (since SECURE 2.0) the ability to roll up to $35,000 of leftover funds into the beneficiary’s Roth IRA. A Trump Account offers little here: the money is locked through most of high school, and while the 10% penalty is waived for qualified tuition, the ordinary income tax isn’t: the growth lands on the child’s return during the exact years that tuition is due, and on the FAFSA as student income.
 
Where a Trump Account earns its place
The $1,000 pilot seed — yes. If your child was born between 2025 and 2028, claim it. It costs you nothing, and even ordinary-income treatment on free money is a 100% return on a $0 investment. Claim the deposit, contribute nothing further, and let it ride.

It asks nothing of you. This is the advantage my projections quietly refuse to price. The custodial lane’s results depend on twenty-five years of annual harvesting, basis tracking, kiddie tax monitoring, and a child’s return filed in the years one is due. A Trump Account requires a Form 4547 and then nothing at all, forever.
That matters more than it looks, because the comparison most families actually face is not the one I modeled. It is a Trump Account against a custodial account nobody manages — no harvesting, dividends compounding into an ever-larger unrealized gain, the whole balance eventually liquidated in a single taxable year. Against that opponent, the Trump Account’s margins in scenarios two and three widen and its loss in scenario one narrows considerably. My model compares a vehicle that needs no driver against one that is expertly driven, and credits the driver’s skill entirely to the vehicle. If you know you will not do the annual work, the recommendation flips.

Financial aid treatment is a structural advantage. Trump Accounts are retirement accounts and sit outside the FAFSA asset calculation. UTMA assets are the student’s asset. That point belongs on this side of the ledger. The offset is on the income side — a distribution taken for education lands in student income, which is assessed harder than any asset — so the advantage is real for a balance left alone through the aid years and evaporates for one that gets tapped. Know which you are planning before you weigh it.

Employer contributions — better than the packaging suggests. New Section 128 lets an employer contribute up to $2,500 per year to the Trump Account of an employee or an employee’s dependent, excluded from the employee’s income, under a written Trump Account contribution program. Two mechanical limits get skipped in most write-ups: the $2,500 counts against the $5,000 aggregate annual cap, so every employer dollar crowds out a family dollar; and the limit is per employee, not per child, so an employee with three kids still tops out at $2,500 in total.
The payroll tax treatment is where this gets interesting. The natural reading of the statute was that Congress excluded these contributions from income tax without adding them to the payroll tax exclusion list, which would leave them subject to FICA. The 2026 Form W-2 instructions point the other way: they provide that if it is not reasonable to believe a contribution will be excludable, it becomes subject to income tax withholding and Social Security and Medicare taxes and gets reported in boxes 1, 3, and 5, which is the same negative-inference drafting used for HSAs and Archer MSAs. A properly excludable Section 128 contribution, reported in box 12 under the new code TA, appears to stay out of boxes 3 and 5 entirely.
If that reading holds, the employer is not indifferent between this and a bonus. A $2,500 contribution saves the employer roughly $191 in payroll tax and the employee the same again, on top of the income tax exclusion. That is a real benefit rather than a repackaged one, and employers designing compensation should treat it that way.
More to the point, Section 128 dollars break the pattern this entire piece is built on. Every criticism above rests on the account taking after-tax money in and handing ordinary income back. Employer contributions come with an exclusion at the employee’s marginal rate — 32% or 35% for many owner-employees — and produce ordinary income decades later on a child who will very likely be in a lower bracket. That is deferral running the correct direction, plus an intergenerational income shift the kiddie tax cannot reach, because distributions can’t occur before 18 and shouldn’t occur for decades after. It is capped, small, and available once per employee per year. It is also the one place in this analysis where the account does something no other vehicle does as cleanly.
In closely held businesses the natural pairing is a child already on the payroll, but note carefully whose exclusion is whose. Wages to a minor employee are already effectively tax-free, as the standard deduction ($16,100 in 2026) zeroes out federal income tax, and a child under 18 working for a parent’s sole proprietorship or a partnership owned solely by the parents is exempt from FICA. Those wages create Roth IRA contribution room, which a Trump Account contribution does not. A Section 128 contribution made because the child is the employee therefore excludes income the child wasn’t going to be taxed on anyway, which is worth nothing.
The valuable version routes through the parent: the parent is the employee, the child is the dependent, and $2,500 comes out of the parent’s W-2 at the parent’s marginal rate. In an owner-managed business you can run both, with wages to the child funding a custodial Roth up to earned income, and a Section 128 contribution against the parent’s compensation. — Of course, this is assuming the program satisfies the written plan and nondiscrimination requirements, which are not optional and are not yet fully specified. The mistake to avoid is substitution: don’t route wages that could fund a custodial Roth into a Trump Account instead. Tax-free forever beats ordinary income later.
One implementation note. Notice 2025-68 signaled that these contributions could run through a Section 125 cafeteria plan as a pre-tax salary reduction, and DOL Technical Release 2026-02 confirmed Treasury’s position that this works for a dependent’s account but not the employee’s own — the latter would be deferred compensation, which cafeteria plans can’t hold. But the Section 125 regulations had still not been published as of July 4, 2026, so the salary reduction election isn’t yet something anyone can implement. If a plan is describing it as available, it isn’t, or at least, it isn’t yet.

A true sixty-year lockbox — the account’s real home. If the money genuinely rides untouched into the child’s sixties, the Trump Account finishes a few percent ahead on retirement income and around 13% ahead as an inheritance. Those are wins, produced by the mechanism the account was built around, and they survive indexed brackets rather than depending on the frozen-bracket math that makes most projections of this kind meaningless.
The question is whether anything else does the same job better. If your child has earned income, a custodial Roth wins outright. It’s tax-free instead of tax-deferred, contributions are accessible without penalty, there’s no 10-year ordinary-income bomb for heirs. If they don’t, a 529 gets a similar lockup with a tax-free education exit and a $35,000 Roth rollover valve. And your own unused retirement headroom — a backdoor Roth you’ll eventually bequeath — beats both. The Trump Account’s winning scenarios are real; it rarely has the best claim on them. But “rarely” is doing more work in that sentence than “never,” and where the alternatives are closed to you, this one isn’t.

A low-bracket Roth conversion at 18 — a salvage maneuver, and possibly a plan. Guidance to date suggests the balance may be convertible once the child takes control. An 18-year-old in the 10–12% bracket converting a modest balance pays very little tax and ends up with Roth treatment forever. For money already in the account this is clearly the right move. For money not yet contributed, it’s worth noting that a conversion path turns the account into something closer to a delayed Roth, which is a better description of its best use than anything in the marketing.

The bottom line
Take the $1,000 because it’s free. Take the employer contribution if one is offered, as it’s a genuine exclusion, probably free of payroll tax on both sides, and it’s the one context where this account’s arbitrage runs the right direction. Beyond that, your own contributions belong in a 529 if the goal is education, a custodial Roth if your child has earned income, and a plain custodial brokerage account if the goal is flexibility and you will actually do the annual work.
If you won’t do the annual work, reconsider. An unmanaged taxable account is a much weaker opponent than the one I modeled, and against it this account looks considerably better. Same for a family whose real worry is a 21-year-old with full access and no budget for a trust.
Here’s the whole thing in one sentence: funded with your own after-tax dollars, a Trump Account beats a deliberately harvested taxable account only on the path where your child never touches the money before 60, and there it wins by single digits while losing by more than twenty points of haircut on every path where the money actually gets used. That’s a narrow target. It isn’t an empty one, the marketing’s mistake isn’t that the account is bad, but that it’s being sold to everyone when it fits a few, at press-release prices.

The financial projections and scenario modeling were developed using an AI language model to ensure consistency and rigor across complex long-term tax scenarios. All assumptions, parameters, methodology, and conclusions reflect the author's professional tax expertise and analysis.