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Congress·In Committee·S. 4026

Sen. Scott Introduces American Dream Accounts Act to Help First-Time Homebuyers Save Tax-Free

American Dream Accounts Act of 2026

13 days ago·View on Congress.gov

Legislative Progress

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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.

    From policy text

    “An American dream account shall be exempt from taxation under this subtitle.”
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  • 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.

    From policy text

    “In the case of an American dream account the beneficiary of which has attained the age of 35 before the close of the calendar year, paragraph (1)(A) shall be applied by substituting `$10,000' for `$7,500'.”
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  • 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.

    From policy text

    “In any case in which there is a distribution with respect to a residence which is acquired by the beneficiary and another person jointly and such other person makes distributions from an American dream account in connection with such acquisition, subclause (I) shall be applied by substituting `$250,000' for `$500,000'.”
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  • If the home is sold within 3 years, the tax-free benefit is clawed back — the homeowner must pay income tax on the withdrawn amount.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.

    From policy text

    “If the principal residence acquired by the taxpayer in a distribution described in subparagraph (A) is sold before the date that is 3 years after the date on which such principal residence was acquired, the amount which would have been included in gross income in the year of the distribution shall be included in gross income in the year in which such principal residence is sold.”
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  • 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.

    From policy text

    “The tax imposed by this chapter for any taxable year on any taxpayer who receives a payment or distribution from an American dream account which is includible in gross income shall be increased by 10 percent of the amount which is so includible.”
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  • Only U.S. citizens are eligible to open these accounts. The program would take effect for tax years beginning after December 31, 2026.

    From policy text

    “The term `eligible individual' means any individual who is a citizen of the United States.”
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TaxesHousing

Impact Analysis

Personal Impact

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions
Mar 9, 2026Senate

Read twice and referred to the Committee on Finance.

Mar 9, 2026

Introduced in Senate

Source Information

Document Type

Congressional Bill

Official Title

American Dream Accounts Act of 2026

Bill NumberS 4026
Congress119th Congress
ChamberSenate
Latest ActionRead twice and referred to the Committee on Finance.

Sponsor

Analysis generated by AI. Always verify with official sources.