First Home Savings Opportunity Act of 2025
Sponsored By: Representative Rep. Subramanyam, Suhas [D-VA-10]
Introduced
Summary
Creates tax-deductible Down Payment Savings Accounts (DPSAs) for first-time homebuyers. This bill would let individuals save cash in a dedicated trust and deduct contributions when used for a home's down payment or closing costs.
Show full summary
- First-time buyers and families: Contributions of cash to a DPSA can be deducted and withdrawals used for qualified down payment or closing costs are tax-free. Deductions are capped at $10,000 per person or $20,000 for joint filers.
- Higher-income filers: The deduction phases out starting at $150,000 modified adjusted gross income for singles and $236,000 for joint filers.
- Banks and account rules: DPSAs must be held by a bank or an IRS-acceptable trustee and carry new reporting duties and penalties. Nonqualified distributions are included in income and generally face a 20% additional tax, with rollovers and limited exceptions for death or disability.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
Tax deduction for first-time buyers
If enacted, you would be able to deduct cash you put into a special down-payment account from your federal taxable income. The deduction would be limited to your earned income or $10,000 ($20,000 if married filing jointly) per year. The deduction phases out when your MAGI is over $150,000 ($236,000 joint) and fully phases out at $200,000 ($315,000 joint). These rules would apply to tax years starting after December 31, 2025.
Tax rules and penalties for withdrawals
If enacted, withdrawals from these down-payment accounts used only for a qualified first-home down payment or closing costs would be tax-free. Money taken out for other purposes would be included in income and could face a 20% additional tax, with exceptions for death or disability. You could roll a distribution into another account within 60 days once per year. These rules would apply to tax years starting after December 31, 2025.
New rules for down payment accounts
If enacted, the bill would create a special U.S. trust account for first-time homebuyers to save for down payments and closing costs. You must be at least 18, be a first-time buyer (no home ownership in the prior three years), and make cash contributions yourself. Trustees must be banks or IRS‑approved persons and the account cannot hold life insurance or be widely commingled. These rules would apply to tax years starting after December 31, 2025.
Account termination and tax exceptions
If enacted, the bill would apply rules like existing retirement-account rules when a down-payment account ends, and would treat such treated amounts as not used for qualified expenses. It would add death and divorce rules like similar tax accounts. The bill would also add limited prohibited-transaction exceptions so some account transactions are not taxed as prohibited. These rules would apply to tax years starting after December 31, 2025.
Trustee reporting and penalties
If enacted, trustees of down-payment accounts would have to report contributions, distributions, rollovers, and earnings to the IRS and give statements to account holders. For rollovers, the old account custodian must report amounts and earnings to the new trustee. Trustees who fail to file could face penalty rules like other tax-favored accounts. These rules would apply to tax years starting after December 31, 2025.
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Sponsors & CoSponsors
Sponsor
Rep. Subramanyam, Suhas [D-VA-10]
VA • D
Cosponsors
Rep. Hinson, Ashley [R-IA-2]
IA • R
Sponsored 12/9/2025
Rep. Thanedar, Shri [D-MI-13]
MI • D
Sponsored 12/9/2025
Del. Norton, Eleanor Holmes [D-DC-At Large]
DC • D
Sponsored 12/9/2025
Rep. Bynum, Janelle S. [D-OR-5]
OR • D
Sponsored 1/12/2026
Roll Call Votes
No roll call votes available for this bill.
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