Sponsors (2)
The bill makes it easier and cheaper for first-time homebuyers to tap IRA savings for down payments (up to $50,000), trading off reduced long-term retirement savings for individuals and modest federal revenue and administrative costs.
First-time homebuyers who have IRAs can withdraw up to $50,000 penalty-free for a first-time home purchase, increasing access to down payments and lowering the effective cost of tapping retirement savings.
IRA owners who use the $50,000 exemption will likely reduce their long-term retirement savings, increasing the risk of inadequate retirement income later in life.
Federal taxpayers may face modestly lower federal revenues because more distributions avoid the 10% additional tax, which could slightly widen deficits or crowd out other spending priorities.
Taxpayers and financial institutions will face added IRS reporting and administrative complexity as the tax code and systems are updated to reflect the new $50,000 limit beginning in 2025.
Based on analysis of 2 sections of legislative text.
Raises the per-taxpayer penalty-free IRA withdrawal limit for first-time home purchases to $50,000.
Official title: Amend the Internal Revenue Code of 1986 to increase the limitation on qualified first-time homebuyer distributions, and for other purposes.
Introduced September 18, 2025 by Ruben Gallego · Last progress September 18, 2025
Increases the maximum amount an individual can withdraw from an IRA penalty-free for a first-time home purchase from the current limit to $50,000. The change applies to taxable years beginning after December 31, 2024 and modifies the Internal Revenue Code exception to the 10% early-distribution additional tax for first-time homebuyer distributions.