Homeownership Savings Act
Sponsored By: Representative Stevens, Haley M. [D-MI-11]
Introduced
Summary
Creates a new homeownership savings account (HSA) as a tax‑favored tool people could use to save specifically for buying a home. The bill lays out who can open accounts, how contributions and investments work, how withdrawals are treated, and how these accounts fit into the rest of the tax code.
Show full summary
- Prospective homebuyers and savers: Get a dedicated, tax-favored account to accumulate money for a home purchase with rules covering contributions and distributions.
- Employers and payroll systems: Employer contributions are explicitly tied into payroll tax and employer‑contribution rules so treatment lines up with existing tax law.
- Account holders and investors: The bill sets eligibility limits, permitted investment rules, and distribution rules for the accounts.
- Tax administrators: Includes conforming amendments and cross-references to coordinate penalties, enforcement, and other Internal Revenue Code provisions.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 3 benefits, 0 costs, 2 mixed.
Employer contributions and payroll rules
This bill would let employers put money into an employee's homeownership savings account without that money counting as the employee's gross income, as long as aggregate contributions stay under the $40,000 lifetime cap. Employer contributions would also be excluded from employment tax bases when it is reasonable to expect the contribution will be excludable. Employers would have to report contributions on Form W-2 and could not directly cut an employee's wages because of making a contribution.
New savings account for first-time buyers
This bill would create a new tax-advantaged homeownership savings account for first-time homebuyers. You would need to be at least 18 and certify you are a first-time buyer. The account would only accept cash, could not hold life insurance, and could not be commingled except in certain pooled funds. The account would have a lifetime contribution cap of $40,000 and people who are not first-time buyers would effectively have a $0 limit.
Tax deduction and inflation indexing
This bill would let account holders deduct cash contributions to their homeownership savings account from gross income. Annual caps would be $3,000 for married filing jointly, $2,500 for head of household, and $2,000 for others. The deduction cannot exceed your earned income and is reduced when your MAGI passes specified thresholds. Starting after 2026, those dollar caps would be indexed to inflation using a 2024 base year.
Withdrawals, rollovers, and penalty rules
This bill would make withdrawals tax-free if the money is used only for a down payment or closing costs for your primary residence when you are a first-time buyer. If you withdraw money for other uses, the withdrawal would be taxable and subject to a 20% additional tax on the includible amount, except for death or disability. You could roll a distribution into another account within 60 days (one rollover per year). If you acquire a principal residence, the account would cease 60 days after the acquisition and the balance on that date would be treated as a distribution. The accounts would also be subject to the existing excise tax rules for excess contributions, though timely returned excesses would not count as contributions for that tax.
Reporting, penalties, and technical fixes
This bill would require trustees to report contributions, distributions, and other account details to the IRS and to give statements to account holders. Officers handling rollovers would have to pass specific information to the receiving trustee. The penalty for failing to file required reports would be expanded to cover these new returns. The bill would also add narrow tax-code fixes and a limited prohibited-transaction exception tied to the 60-day account-termination rule.
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.
View on Congress.gov