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119-hr-8709119th CongressWALLET

Homeownership Savings Act

Sponsored By: Representative Stevens, Haley M. [D-MI-11]

Introduced

Summary

Creates a new tax-advantaged Homeownership Savings Account to help first-time buyers build down payments and cover closing costs. The bill writes the account into the tax code and lays out who can open one, how much can be saved, and when withdrawals are tax-free.

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  • First-time homebuyers age 18 and older must certify first-time status to open an account. Qualified withdrawals are limited to a down payment or closing costs and lifetime contributions are capped at $40,000.
  • Contributions are deductible each year but annual deductions are capped by filing status, for example $3,000 for joint filers, and the deduction phases out above specified modified adjusted gross income thresholds.
  • Employers may contribute and those contributions are excluded from income and employment taxes up to the annual limit, but employees may not use salary reductions to fund the account.

*Applies to tax years beginning after December 31, 2026.*

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 0 benefits, 1 costs, 4 mixed.

Employer HSA pay and payroll rules

If enacted, employer contributions to your Homeownership Savings Account would be excluded from your gross income to the extent they do not make your lifetime contributions exceed the $40,000 cap. Employer contributions would count with all other contributions toward that lifetime limit. Employers would have to report HSA contributions on your Form W-2 in a new reporting line, and they could exclude expected excludable contributions from wages for Social Security, Railroad Retirement, and unemployment taxes. These rules would apply for taxable years beginning after December 31, 2026.

How HSA withdrawals and penalties work

If enacted, money you take from an HSA for a down payment or closing costs for your first home would not be taxed. If the money is not used only for those costs, it would be includible in income and generally subject to a 20% additional tax, with exceptions for death or disability. When you acquire your principal residence, your HSAs would stop being HSAs 60 days after the acquisition and account balances then would be treated as distributed. You would be allowed a tax-free rollover to another HSA if you deposit within 60 days, but rollovers would be blocked if you had another rollover in the prior year. These rules would apply for taxable years beginning after December 31, 2026.

New homeownership savings accounts

If enacted, this bill would create a new Homeownership Savings Account you must open as a U.S. trust. You would have to be at least 18 and certify you are a first-time homebuyer when you open it. Lifetime contributions for each beneficiary would be limited to $40,000 and only cash contributions would be allowed. Trustees would have to report account details to the IRS and follow new prohibited-transaction rules; penalties would apply for missing reports. These rules would apply for taxable years beginning after December 31, 2026.

Tax deduction for HSA contributions

If enacted, you would be able to deduct cash you put into a Homeownership Savings Account on your tax return. The annual limits would be $3,000 if married filing jointly, $2,500 if head of household, and $2,000 for other filers. The deduction could not be more than your earned income and is disallowed if another taxpayer can claim you as a dependent. The deduction would be phased down when your modified adjusted gross income is over filing-status limits, and dollar amounts would be indexed after 2026. These rules would apply for taxable years beginning after December 31, 2026.

Penalties for excess HSA contributions

If enacted, extra amounts you put into an HSA above the rules would be treated as excess contributions and could trigger an excise tax. The bill would apply existing excess-contribution rules to HSAs and allow limited carryover mechanics. Contributions returned before your tax return are treated as not contributed for excise-tax purposes. These rules would apply for taxable years beginning after December 31, 2026.

Sponsors & CoSponsors

Sponsor

Stevens, Haley M. [D-MI-11]

MI • D

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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