First-Time Homebuyer Savings Act of 2026

Bill Number: H.R. 8221
Origin Chamber: House
Congress: 119th Congress, Session 2
Policy Area: Taxation
Status: Introduced
Latest Action: 2026-04-09: Referred to the House Committee on Ways and Means.
Last Updated: 2026-04-15T01:37:31Z

AI-Generated Summary

Purpose

The First-Time Homebuyer Savings Act of 2026 (H.R. 8221) amends the Internal Revenue Code (IRC) to create tax-advantaged savings accounts for first-time homebuyers. These accounts allow eligible individuals to deduct contributions from their taxable income to save specifically for buying or building a principal residence (main home).

Key Provisions

Eligibility: Applies to "eligible individuals" who (and their spouse, if married) have not owned a residential property in the past 3 years.
Contributions:
Annual limit: $10,000 per individual across all accounts.
Deductible from taxable income (adjusted gross income, or AGI, is total income minus certain deductions).
Must be cash; no income limit except AGI over $200,000 ($400,000 for joint filers) disqualifies the deduction.
Account Rules:
Trust managed by a bank, insurance company, or approved entity.
Assets cannot be invested in life insurance or commingled improperly; balance is nonforfeitable.
Rollovers allowed within 60 days (once per year).
Qualified Expenses (tax-free withdrawals):
Buying or building a principal residence, including costs like land, permits, and transaction fees.
Related expenses within 3 years after purchase or completion.
Withdrawals:
Non-qualified: Taxable as income + 10% penalty.
Excess contributions: Can be withdrawn penalty-free before tax filing deadline, plus net income.
Post-Home Purchase:
After buying a home, unused funds can transfer to an IRA within 180 days post-3-year window.
Account terminates afterward; remaining funds treated as distributions.
Other:
Accounts tax-exempt (except unrelated business income tax).
Treasury Secretary publishes annual national average single-family home price by December 31.
Employer contributions to these accounts not treated as wages.

Significant Changes to Existing Law

Adds new IRC Section 225A for these accounts, similar to health savings accounts or IRAs but home-specific.
Amends Section 3121 (Social Security wages) to exclude contributions from wage taxes.
Expands Section 4973 to impose 6% tax on excess contributions.
Effective for tax years after enactment.

Potential Impacts

Citizens: Encourages saving for home down payments via tax breaks, potentially increasing homeownership among non-owners (especially middle-income earners under AGI limits).
Government Agencies: IRS handles reporting/enforcement; Treasury publishes home price data annually—increases administrative workload but no new funding specified.
Economy/Housing: May boost first-time buying/construction; limited by caps and income restrictions.

Main Stakeholders

First-time homebuyers: Primary beneficiaries for tax savings.
Financial institutions (banks, insurers): Act as trustees/administrators.
IRS/Treasury Department: Enforcement, taxation, and data publication.
Taxpayers/employers: Affected by deductions, penalties, and wage exclusions.

Notable Implications

Legal/Tax: Introduces targeted tax incentives like IRAs but with homeownership focus and penalties to prevent abuse; aligns with IRC precedents (e.g., Section 121 for home sale exclusions).
Constitutional: No apparent issues; standard congressional tax authority under Article I.
Political: Promotes homeownership policy without broad spending; could face debate on revenue loss (deductions reduce tax collections) or equity (excludes higher earners).

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Mace, Nancy [R-SC-1]

Recent Actions

2026-04-09: Referred to the House Committee on Ways and Means.
2026-04-09: Introduced in House
2026-04-09: Introduced in House

Bill Versions

First-Time Homebuyer Savings Act of 2026 — issued 2026-04-09 — PDF (10 pages)