Sponsors (2)
The bill creates refundable tax-advantaged accounts and employer tax-free contributions to help many Americans save for a first home, but limits on contributions, taxes/penalties on certain distributions, eligibility exclusions, and administrative burdens could curb usefulness—especially in high-cost areas and for those with complex housing histories.
First-time homebuyers, young adults, and middle-class families can deduct contributions to a First-time Homebuyer Savings Account and exclude qualified distributions used for down payments, closing costs, or financing from gross income, lowering their taxes when saving for and buying a primary residence.
Employees (and their families) can receive tax-free employer contributions under the new §139J, effectively increasing take-home compensation and making employer-assisted home savings more attractive.
Lifetime caps are scaled to 20% of the median state home price, so account limits are calibrated to local housing costs rather than a single national cap, improving relevance across different housing markets.
Lifetime and annual contribution limits (including state-based caps) may prevent savers—especially young adults and low- and moderate-income individuals—from accumulating enough funds to buy in high-cost housing markets.
Account balances can be treated as taxable distributions in certain circumstances when acquiring a principal residence, which could trigger income tax and undermine the intended tax benefit for some beneficiaries.
A 20% additional tax applies to includible (nonqualified) distributions, substantially raising the cost of mistakes or nonqualified withdrawals.
Based on analysis of 2 sections of legislative text.
Creates a deductible, tax-preferred "first-time homebuyer savings account" with cash-only contributions, a lifetime cap tied to 20% of state median home sale price, and tax-favored use for buying a primary residence.
Introduced February 9, 2026 by Kat Cammack · Last progress February 9, 2026
Creates a new federal tax-preferred savings account for first-time homebuyers that lets eligible individuals deduct cash contributions and use the account tax-favored for buying a primary residence. Accounts are trusts with trustee requirements, must be for first-time buyers (no ownership of a principal residence in the prior three years), and have a lifetime contribution cap pegged to a state-specific threshold (20% of the state's median home sale price) plus an annual contribution limit set in the law. Accounts cannot hold life insurance, may accept rollovers, stop qualifying once the beneficiary acquires a principal residence, and remain subject to unrelated business income tax rules.