Sponsors (2)
The bill creates tax-advantaged accounts and employer tax exclusions to help people save for a first home, improving affordability for many, but it limits who can participate, caps savings in expensive markets, adds compliance burdens, and imposes steep taxes/penalties on nonqualified uses.
Prospective first-time homebuyers and savers can deduct contributions to a First-time Homebuyer Savings Account, lowering their taxable income in the year of contribution and making saving more affordable.
Individuals using account funds for qualified home purchase costs (down payment, closing costs, financing) can exclude those distributions from gross income, reducing the tax burden when they buy a primary residence.
Employees can receive employer contributions to these accounts excluded from gross income under new §139J, effectively increasing take-home compensation and facilitating employer-assisted saving for homeownership.
Savers in high-cost housing markets and lower-income individuals may be unable to accumulate enough under the lifetime and annual contribution limits (including state-based caps), limiting the accounts' usefulness where housing is most expensive.
Account balances may be treated as taxable distributions when the beneficiary acquires a principal residence (as structured), potentially triggering income tax and penalties at the moment of purchase.
A 20% additional tax applies to includible (nonqualified) distributions, substantially raising the cost of nonqualified withdrawals and discouraging flexibility for savers who need funds for other uses.
Based on analysis of 2 sections of legislative text.
Creates a tax-deductible, state‑capped first-time homebuyer savings account for qualifying primary-residence purchases.
Official title: To amend the Internal Revenue Code of 1986 to allow the establishment of first-time homebuyer savings accounts.
Introduced February 9, 2026 by Kat Cammack · Last progress February 9, 2026
Creates a new tax-preferred savings account called a "first-time homebuyer savings account" that lets eligible individuals deduct cash contributions from their taxable income to save for buying a primary residence. Accounts are trust-based, limited by lifetime and annual contribution caps tied to a State-specific ceiling, restricted to first-time homebuyers (no ownership in prior 3 years), and tax-exempt so long as funds are used for qualified home‑ownership expenses. The bill sets rules for trustees, investment limits, beneficiary requirements (age 18+), rollover treatment, and disqualification when the beneficiary acquires a principal residence; the accounts remain subject to unrelated business income tax. Definitions and many administrative rules mirror existing individual retirement account and retirement-savings provisions in the Internal Revenue Code.