Legislation1w ago
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To authorize implementation grants to community-based nonprofits to operate one-stop reentry centers.
HR8548Rep. Kamlager-Dove, Sydney [D-CA-37] (D-CA)
introduced
S4026119th CongressWALLET
American Dream Accounts Act of 2026
Sponsored By: Senator Sen. Scott, Rick [R-FL]
Introduced
Summary
Creates a tax-exempt American Dream Accounts program to help U.S. citizens save for home purchases and related qualified expenses. This bill would establish detailed rules for contributions, tax treatment of withdrawals, rollovers, penalties, trustee duties, and annual reporting.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 1 costs, 2 mixed.
Limits and penalties on ADA contributions
If enacted, yearly ADA contributions would be limited to the lesser of $7,500 (or $10,000 if you are age 35 before year-end) or the remaining lifetime cap. The bill would cap lifetime contributions at $250,000 per beneficiary, reduced by prior contributions. Certain rollovers would not count toward the annual or lifetime limits. The bill would also add an excess-contribution tax rule for ADAs that computes excesses using this year's overage plus prior-year excess reduced by non-rollover distributions. These rules would apply for tax years beginning after December 31, 2026.
Tax-free withdrawals for first homes
If enacted, ADA distributions used to buy a first home could be excluded from taxable income under a special rule. The exclusion would be capped at $500,000 generally, or $250,000 when the home is acquired jointly and another person made ADA distributions in connection with the purchase. You could not claim the exclusion if you previously used it. If the purchased residence is sold within three years, the excluded amount would be taxed again unless an exception applies (death, change in legal marital status, change in number of dependents, termination of employment, or a required employment move of 50 or more miles). The bill would also make most ADA payouts taxable under general rules and add a 10% extra tax on nonqualified distributions, with exceptions for death or disability. These rules would apply for tax years beginning after December 31, 2026.
New trustee and reporting rules
If enacted, trustees and custodians of ADAs would face new rules and reporting duties. Trustees would generally need to be banks or show they can administer ADAs. They would accept cash only, not invest ADA assets in life insurance, keep assets separate, and treat beneficiaries' interests as nonforfeitable. Trustees must report account activity to the IRS and give statements to beneficiaries. The bill would also apply prohibited-transaction rules to ADAs. These rules would apply for tax years beginning after December 31, 2026.
New tax-advantaged home savings account
If enacted, the bill would create a new American Dream Account (ADA) for U.S. citizens. ADAs would have to be U.S. trusts and would be tax-exempt under the Internal Revenue Code while remaining subject to unrelated business income tax. The accounts would be intended mainly to save for first-time home purchases and related qualified expenses. These rules would apply for tax years beginning after December 31, 2026.
New rollover rules for ADA funds
If enacted, some ADA rollovers would be allowed but with strict limits. You could redeposit a distribution within 60 days to another ADA for the same beneficiary. Direct trustee-to-trustee transfers could move ADA money to a family-member's ADA or into a Roth IRA for the same beneficiary. Same-beneficiary rollovers would be barred if a rollover applied to any distribution in the prior 12 months. Annual transfer limits would be set by reference to contribution limits and a $100,000 lifetime limit would apply to certain transfers. These rules would apply for tax years beginning after December 31, 2026.
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Sponsors & CoSponsors
Sponsor
Sen. Scott, Rick [R-FL]
FL • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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