Iowa is implementing a new initiative to support foster children by eliminating what is known as the “orphan tax.” This change allows federal survivor benefits from deceased parents to be held in dedicated savings accounts for children in foster care. Instead of these funds being used for immediate care, they will be invested into savings plans for college or first-time home purchases, with children gaining access to these accounts upon turning 18.
Governor Kim Reynolds stated that this initiative aligns with efforts to help foster children achieve financial stability as they transition to adulthood. The state is one of 31 to adopt this system, part of a broader initiative led by First Lady Melania Trump to enhance federal support for foster children. While nearly 4,000 foster children are currently in Iowa, officials note that only a small percentage will benefit, as many have living biological parents.
Additionally, Iowa is partnering with Google to modernize its foster care online system and continues to offer support through programs like extended Medicaid and scholarship opportunities for youth leaving the foster care system.
