Universal Savings Account Act of 2025
Sponsored By: Senator Cruz, Ted [R-TX]
Introduced
Summary
Universal Savings Accounts (USAs) would create a new tax-preferred personal savings trust for individuals. The bill sets who can run the accounts, how much can be saved each year, and tax and reporting rules for contributions and distributions.
Show full summary
- Families and individual savers would get a tax-exempt account for personal savings. Annual contributions start with $10,000 plus $500 for each year after 2024, subject to a $25,000 annual cap and inflation adjustments after 2025.
- Trustees and financial firms must be a bank or an approved administrator and keep USA assets separate. Custodial accounts can qualify if held by a bank or other qualified person.
- Tax administration would require trustee reporting to the IRS and beneficiaries, allow 60-day rollovers between USAs, treat a surviving spouse who inherits an account as the account holder, and tax excess contributions and certain prohibited transactions under existing penalty rules.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 3 benefits, 2 costs, 0 mixed.
Yearly contribution limits
If enacted, yearly contributions to all your USAs (except rollovers) would start at $10,000 for 2025 and increase by $500 for each year after 2024 up to a cap. The total yearly limit would not exceed $25,000, and after 2025 both the base amount and the $25,000 cap would be adjusted for inflation and rounded down to the next lower $100. These rules would apply to contributions for tax years starting after December 31, 2024.
New tax-free Universal accounts
If enacted, the bill would create a new tax-preferred account called a Universal Savings Account (USA). A USA would be a trust or qualifying custodial account for one person and would grow generally tax-free. Trustees must meet rules set by the Treasury, assets cannot be invested in life insurance, and rollovers between USAs would be allowed within 60 days. If a surviving spouse inherits the account, they would be treated as the account holder; other transfers at death would end USA status.
Tax-free USA withdrawals
If enacted, distributions you take from a USA would generally not be included in your taxable income. One exception would apply: net income tied to excess contributions would be taxable in the year the excess contribution was made. That makes normal withdrawals likely tax-free but overcontributions can create taxable income.
Penalties and excess contribution rules
If enacted, excess USA contributions would be subject to an excise tax like other retirement-type excesses. Excesses would equal amounts over the yearly limit plus a carryforward calculation reduced by distributions. USAs would also be subject to prohibited-transaction rules, so disallowed deals with the account could trigger taxes or excise penalties.
Trustee reporting and penalties
If enacted, trustees of USAs would have to file reports with the IRS and give statements to account holders about contributions, distributions, and other items the Treasury prescribes. Trustees who fail to provide these reports could face penalties under the tax code.
Sponsors & CoSponsors
Sponsor
Cruz, Ted [R-TX]
TX • R
Cosponsors
Sen. Justice, James C. [R-WV]
WV • R
Sponsored 5/8/2025
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov