NEST Act

Key Points

• This bill creates a new type of savings account designed to help people buy their first home. Money put into these accounts is tax-deductible, meaning it lowers your taxable income for the year, and the money grows tax-free while it is in the bank.
• To qualify, you must be at least 18 years old and cannot have owned a home in the last three years. The money in the account must be used for a down payment, construction costs, or closing costs for a primary residence.
• There is a limit on how much you can save based on where you live. You cannot contribute more than 20% of the average home price in your state over the lifetime of the account.
• Employers are allowed to contribute to these accounts for their workers. These employer contributions would not count as taxable income for the employee and would be exempt from Social Security and unemployment taxes.
• If you take money out for anything other than buying a home, you will have to pay regular income taxes on that money plus an extra 20% tax penalty. This ensures the funds are used specifically for housing.
• If the bill passes, these accounts would become available starting in 2026. The government would update the savings limits each year to keep up with rising home prices in different states.