Sponsor
Haley Stevens
Representative · D-MI
Representative · D-MI
The bill creates a tax‑favored savings vehicle that modestly helps middle‑income and first‑time buyers save for a home (through upfront deductions and tax‑free qualified withdrawals) while limiting its reach with low contribution caps and income phaseouts and imposing penalties and employer compliance costs.
Middle-class families and first-time homebuyers can use a new homeownership savings account with an upfront deduction and tax-free growth/withdrawals for qualified down payment/closing costs, lowering current tax liability and making saving for a home more tax-efficient.
Employees (and other taxpayers) can receive employer contributions to these accounts that are excluded from gross income, effectively increasing take-home pay when employers contribute.
Taxpayers, account trustees, and the IRS benefit from clearer anti‑abuse and reporting rules (trustee reports, W‑2 reporting, penalties), improving enforcement, transparency, and program integrity.
First-time buyers in high‑cost areas and many savers will find the $40,000 lifetime cap and low annual limits ($2,000–$3,000) insufficient to meaningfully accelerate home purchases.
Account holders who make nonqualified withdrawals will face inclusion in gross income plus a 20% additional tax, creating substantial penalties for people who change plans or cannot use funds for a qualified purchase.
Middle‑income households near the modified adjusted gross income (MAGI) phaseout thresholds may receive reduced or no deduction, limiting the benefit for families just above cutoff points.
Based on analysis of 2 sections of legislative text.
Creates a new above-the-line deduction for cash contributions to a qualified homeownership savings trust with set annual caps and MAGI phaseouts.
Official title: To amend the Internal Revenue Code of 1986 to allow the establishment of homeownership savings accounts.
Introduced May 7, 2026 by Haley Stevens · Last progress May 7, 2026
Creates a new tax-preferred savings account for individuals to save toward homeownership by allowing an above-the-line deduction for cash contributions to a qualified homeownership savings trust. The measure sets annual deduction limits by filing status, limits the deduction to earned income, phases the deduction out for higher modified adjusted gross income (MAGI), and defines basic trust and trustee requirements while leaving many implementation details (qualified expenses, distribution tax treatment, and reporting rules) unspecified. The account deduction caps are $3,000 for joint filers, $2,500 for heads of household, and $2,000 for single filers or others; eligibility phases down above specified MAGI thresholds and the deduction is not allowed for dependents. The bill adds the new provision to the individual income tax code but does not include detailed rules on distributions, qualified expenses, or effective date in the provided text.