Sponsor
Haley Stevens
Representative · D-MI
Representative · D-MI
The bill creates a tax‑favored savings vehicle to help many middle‑income Americans and first‑time buyers save for a home and to let employers contribute tax‑free, but the benefit is modest in dollar terms, phases out for higher earners, may be inadequate in high‑cost markets, imposes steep penalties for nonqualified use, and adds employer compliance burdens.
Middle‑class families and individual taxpayers can deduct up to $2,000–$3,000 in annual contributions to a homeownership savings account, lowering taxable income and reducing federal tax liability.
Young adults and first‑time homebuyers can grow contributions and earnings tax‑free when funds are used for qualified down payments and closing costs, making saving for a first home more tax‑efficient.
Employees may receive employer contributions (within statutory limits) that are excluded from gross income, effectively increasing take‑home pay when employers contribute to these accounts.
Young adults and first‑time buyers in high‑cost housing markets are unlikely to accumulate sufficient savings under the relatively low annual limits ($2,000–$3,000) and $40,000 lifetime cap to meaningfully accelerate home purchases.
Households with modified adjusted gross income near the phaseout thresholds will receive reduced or eliminated deduction benefits, introducing benefit cliffs and unequal value across middle‑income earners.
Nonqualified distributions are includible in gross income and subject to a 20% additional tax, exposing account holders to potentially large tax costs if funds are not used for qualified home costs or if they change plans.
Based on analysis of 2 sections of legislative text.
Creates a deductible "homeownership savings account" allowing annual above‑the‑line deductions (caps: $3,000 joint, $2,500 HOH, $2,000 single) with 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 federal "homeownership savings account" (HSA) that lets individuals deduct cash contributions to the account from taxable income. The bill sets annual deduction limits by filing status, limits the deduction to earned income, phases out the deduction above specified MAGI thresholds, and defines basic trust/account rules for qualified accounts. The measure establishes contribution caps ($3,000 joint, $2,500 head of household, $2,000 single/other), earned‑income and MAGI tests, and trustee/asset rules for HSA trusts, but does not specify many operational details such as qualified expenses, distribution tax treatment, reporting, or an effective date in the provided text.