First-time Homebuyer Savings Account Act of 2026
Summary
What This Bill Does
The First-time Homebuyer Savings Account Act of 2026 creates a federal income-tax deduction for cash contributed to a qualifying homeowner savings account. An eligible individual, and the individual's spouse if married, must have had no ownership interest in a principal residence during the preceding three years. Qualified expenses include purchasing or constructing that person's principal residence and making covered alterations, repairs, or improvements to it.
Annual contributions are limited to the lowest of the applicable IRA contribution limit, the individual's compensation, or the amount that would bring the account above 20 percent of Treasury's published national average single-family-home price. The deduction phases down for income above the applicable IRA threshold. The account must be held by a bank, insurance company, or other approved trustee, cannot invest in life insurance, generally cannot commingle assets, and must provide a nonforfeitable interest.
Qualified home-expense distributions are excluded from income. Other withdrawals are generally taxable and carry an additional 10-percent tax, except for specified job-loss, medical, marriage, death, residence-abroad, rollover, and other Treasury-approved circumstances. Rollovers generally must occur within 60 days. Treasury must publish the national average home price annually, and the bill applies to tax years beginning after enactment.
Who Benefits and How
Eligible first-time homebuyers benefit from deductible contributions, tax-free account growth, and tax-free qualified withdrawals. Married households may use spousal compensation rules. Banks, insurance companies, and approved custodians gain a new account product. Homebuilders and home-improvement contractors may gain demand when savings are used for construction, repairs, or improvements.
Who Bears the Burden and How
Federal income-tax accounts lose revenue from deductions and tax-free qualified distributions. IRS and Treasury staff must write guidance, approve custodians, publish the annual home-price estimate, process deductions and penalties, and define additional exempt circumstances. Account trustees must enforce contribution, investment, rollover, and distribution rules. Account holders must document eligibility and expenses; nonqualified withdrawals are included in income and generally incur the additional 10-percent tax.
Key Provisions
- Creates a deduction for cash contributions to homeowner savings accounts.
- Limits eligibility to people without principal-residence ownership during the prior three years.
- Defines qualified uses as purchase, construction, repairs, alterations, or improvements to the new principal residence.
- Caps contributions by IRA limits, compensation, and 20 percent of the national average home price.
- Requires Treasury to publish the national average single-family-home price annually.
- Excludes qualified distributions from gross income.
- Adds a 10-percent tax to most nonqualified withdrawals while protecting specified emergencies and life events.
- Requires compliant trustees and applies the rules to tax years beginning after enactment.
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers with clause-level evidence links.
At a Glance
What This Bill Does
Creates tax-advantaged homeowner savings accounts for individuals who have not owned a principal residence during the prior three years, allowing deductible contributions and tax-free qualified home purchases, construction, repairs, and improvements.
Key Policy Areas
Individual Income Tax, First-Time Homebuyers, Tax-Advantaged Savings, Housing Finance, Home Improvement, Financial Institutions
Primary Purpose
Creates tax-advantaged homeowner savings accounts for individuals who have not owned a principal residence during the prior three years, allowing deductible contributions and tax-free qualified home purchases, construction, repairs, and improvements.
Policy Domains
Section 2 tax treatment of homeowner savings accounts
Identified Gains
- Eligible first-time homebuyers
- Married first-time-homebuyer households
- Banks offering homeowner savings accounts
- Insurance companies offering homeowner savings accounts
- Approved account custodians
- Homebuilders serving account beneficiaries
- Home-improvement contractors serving account beneficiaries
Identified Costs
- Federal individual income-tax accounts
- Treasury home-price publication staff
- IRS homeowner-account guidance staff
- Bank account compliance officers
- Insurance-company account compliance officers
- Account beneficiaries making nonqualified withdrawals
- Tax preparers verifying homeowner-account deductions
Sponsors
Legislative Progress
In CommitteeReferred to the House Committee on Ways and Means.
Introduced in House
Mr. Barrett introduced the following bill; which was referred to …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Account beneficiaries making nonqualified withdrawals, Eligible first-time homebuyers, Married first-time-homebuyer households
Positive-direction: Eligible first-time homebuyers, Married first-time-homebuyer households
Negative-direction: Account beneficiaries making nonqualified withdrawals
Approved account custodians, Bank account compliance officers, Banks offering homeowner savings accounts
Federal individual income-tax accounts, IRS homeowner-account guidance staff, Treasury home-price publication staff
Home-improvement contractors serving account beneficiaries, Homebuilders serving account beneficiaries
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "account_trustee"
- → Bank, insurer, or approved person administering a homeowner savings account
- "treasury_secretary"
- → Secretary of the Treasury administering limits and exceptions
- "eligible_individual"
- → Individual without principal-residence ownership during the prior three years
Key Definitions
Terms defined in this bill
A U.S. trust or qualifying custodial account established exclusively to pay an account beneficiary's qualified homeowner expenses.
An individual whose spouse, if any, also had no principal-residence ownership interest during the preceding three years.
Purchase or construction of the eligible person's principal residence and covered alterations, repairs, or improvements to that residence.
A withdrawal for specified job-loss, medical, marriage, death, residence-abroad, or other Treasury-approved circumstances.
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
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