American Dream Accounts Act of 2026

Key Points

• This bill creates "American Dream Accounts" — special tax-free savings trusts for U.S. citizens to save for their first home. The accounts work similarly to retirement savings accounts, where money grows tax-free as long as it's used for a qualifying home purchase.
• Annual contributions are capped at $7,500, but people age 35 and older can contribute up to $10,000 per year as a "catch-up" contribution. The total lifetime contribution limit across all accounts is $250,000.
• First-time homebuyers can withdraw up to $500,000 tax-free to purchase a home. If two people buy a home together and both use their accounts, each is limited to $250,000.
• If the home is sold within 3 years, the tax-free benefit is clawed back — the homeowner must pay income tax on the withdrawn amount. Exceptions exist for major life events like death, divorce, job loss, or a military-related move of 50+ miles.
• Money not used for a home can be rolled over into a Roth IRA or transferred to a family member's account, up to a $100,000 lifetime limit. Non-qualifying withdrawals face a 10% penalty plus regular income taxes.
• Only U.S. citizens are eligible to open these accounts. The program would take effect for tax years beginning after December 31, 2026.