Sponsor
Nancy Mace
Representative · R-SC
Representative · R-SC
The bill creates a tax-advantaged FHSA to make saving and buying a first home cheaper for many lower- and middle-income Americans, but its annual cap, eligibility limits, compliance rules, and the FICA exclusion (which slightly reduces Social Security taxable earnings) constrain benefits and create trade-offs for future retirement revenues and high-cost-market buyers.
First-time homebuyers can take qualified distributions from an FHSA tax-free when used to buy or build a primary residence, lowering the after-tax cost of home purchase.
Eligible first-time buyers can deduct up to $10,000 in annual FHSA contributions, reducing taxable income for savers and improving short-term affordability of saving for a home.
Employees who receive employer FHSA contributions pay no FICA on those contributions, lowering payroll tax liabilities for workers with employer-funded FHSA help.
The $10,000 annual cap and the 3-year first-time buyer window may be inadequate in high-cost housing markets and excludes people who briefly owned property earlier, limiting usefulness for many potential buyers.
Excluding employer FHSA payments from FICA wages reduces Social Security taxable earnings, which could slightly lower future Social Security benefits for affected workers or increase long-term pressure on the program.
Taxpayers face penalties and inclusion rules for nonqualified distributions or excess contributions, creating compliance costs, the risk of unexpected taxes, and administrative burden.
Based on analysis of 2 sections of legislative text.
Creates a deductible First-Time Homebuyer Savings Account with $10,000 annual cap, tax-free qualified withdrawals, income phaseouts, and excluded employer contributions from FICA.
Official title: To amend the Internal Revenue Code of 1986 to establish first-time homebuyer savings accounts.
Introduced April 9, 2026 by Nancy Mace · Last progress April 9, 2026
Creates a new tax-preferred savings account called a First-Time Homebuyer Savings Account (FHSA) that lets eligible individuals deduct cash contributions up to $10,000 per year and withdraw qualified distributions tax-free to buy a first home. The bill phases out the deduction above specified income thresholds, sets eligibility as no ownership interest in a residence in the prior three years, requires an annual national average single-family home price estimate from Treasury, and makes employer contributions to FHSAs exempt from FICA wages. The measure adds FHSA rules for rollovers, excess contributions, account termination after home acquisition, and applies existing excess-contribution penalties; changes take effect for taxable years beginning after enactment.