First-time Homebuyer Savings Account Act of 2026

Key Points

• This bill creates a new tax-advantaged savings account for people who haven't owned a home in the last three years. Contributions are tax-deductible, similar to a traditional IRA, helping first-time buyers save for a down payment faster by lowering their taxable income each year they contribute.
• Money in the account can be used tax-free to buy or build a first home, or to make major repairs and improvements on that home. As long as the funds go toward these qualified expenses, withdrawals and any investment gains are completely exempt from income tax.
• Annual contributions are capped at roughly the same level as IRA limits, and total account balances cannot exceed 20% of the national average single-family home price. Higher-income individuals will see their deduction gradually reduced and phased out, targeting the benefit toward middle- and lower-income savers.
• Withdrawals for non-housing purposes are hit with regular income tax plus a 10% penalty. However, the bill carves out penalty-free exceptions for emergencies like job loss, major medical expenses, getting married and gaining a home that way, death, or living abroad.
• The bill takes effect for tax years beginning after the date it's signed into law. The Treasury Secretary would be required to publish the estimated national average home price each year to set the account balance cap.