First-Time Homebuyer Savings Act of 2026

Key Points

• This bill creates a new type of tax-advantaged savings account specifically for first-time homebuyers. You could deduct contributions from your taxable income, up to $10,000 per year, to save for buying or building a home.
• Money in the account grows tax-free and can be withdrawn without taxes or penalties when used for qualified home purchases, including closing costs, land purchases, construction, and other expenses tied to buying or building a principal residence.
• To qualify, you cannot have owned a home in the last three years. The tax deduction phases out completely for individuals earning more than $200,000 or married couples earning more than $400,000.
• If you withdraw money for non-housing purposes, you owe income taxes plus a 10% penalty. But after you buy your home and live in it for three years, you can roll leftover funds into an IRA within 180 days without penalty.
• Contributions to the account are also excluded from wages for payroll tax purposes, giving workers an additional tax break beyond just the income tax deduction.