Universal Savings Account Act of 2025

Summary

Creates a new type of tax-preferred individual savings account and brings that account under existing Internal Revenue Code rules for excess contributions, prohibited transactions, and reporting failures. The bill adds the account type to the code’s lists of accounts subject to the excess-contribution excise tax, the prohibited-transaction excise tax, and a reporting-failure penalty, and it permits corrective distributions by the tax return due date. Financial institutions and account custodians must follow the new reporting and compliance rules; account holders face the same excess-contribution and prohibited-transaction tax rules that apply to other tax-advantaged accounts. The changes apply to taxable years beginning after December 31, 2024.

• Creates a new tax-preferred individual savings account category in the Internal Revenue Code.
• Subjects the new account to the excess-contribution excise tax under Section 4973.
• Defines excess contributions with a carryforward/reduction approach and allows corrective distributions by the tax return due date.
• Adds the account to the list of arrangements subject to the prohibited-transaction excise tax under Section 4975.
• Establishes a new reporting-failure penalty for failures to file required reports for the account under Section 6693.
• Updates Subchapter F’s table of parts to reflect the new account category.
• Effective for taxable years beginning after December 31, 2024.
• Places compliance and reporting responsibilities on account custodians and creates new potential excise-tax exposure for account owners.