Sponsors (2)
Introduced February 9, 2026 by Kat Cammack · Last progress February 9, 2026
The bill creates tax‑favored savings accounts that help middle‑class and first‑time buyers lower the cost of purchasing a home, but it shifts payroll tax revenue away from social insurance, may be inadequate in high‑cost markets, and adds compliance burdens and penalty risks.
Middle‑class families, first‑time homebuyers, and young adults can lower their taxable income now (via deductible contributions) and reduce the tax cost of buying a first home later (distributions for qualified home‑purchase expenses are excluded from income).
Employees (and their employers) can receive employer contributions to these accounts excluded from employees' gross income and payroll taxes, effectively increasing take‑home pay when employers offer such contributions.
State‑indexed lifetime caps (tied to a share of local median sale price) focus benefits on local housing markets and limit overly large tax‑favored accumulations.
Workers and future retirees face a smaller Social Security and unemployment tax base because employer contributions excluded from wages reduce payroll tax receipts, which could lower future program receipts or benefits.
Prospective homebuyers in high‑cost states (and many middle‑class families there) may be unable to save enough because lifetime and annual contribution limits are tied to state median home prices, constraining usefulness in expensive markets.
Account beneficiaries who withdraw funds for non‑qualified uses face inclusion of the withdrawal in taxable income plus a 20% additional tax on the taxable amount, creating a steep penalty risk for mistakes or changing plans.
Based on analysis of 2 sections of legislative text.
Creates a deductible, tax-preferred first-time homebuyer savings account with trustee and investment rules and a state-based lifetime contribution cap.
Creates a new tax-preferred savings account for first-time homebuyers that lets eligible individuals deduct cash contributions made during the year and shelter account earnings from tax while the account remains designated for first-time home purchase costs. The accounts have eligibility rules (no ownership of a principal residence in the prior 3 years, age 18+), trustee and investment restrictions, a lifetime contribution cap tied to state median home sale prices, and tax treatment rules including exemption from most income tax while designated and applicability of unrelated business income tax.