To amend the Internal Revenue Code of 1986 to allow a deduction for amounts contributed to home savings accounts, and for other purposes.
- Bill Number
- H.R. 9480
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-06-25: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-07-09T16:01:15Z
AI-Generated Summary
Purpose This legislation amends the Internal Revenue Code of 1986 to create tax-advantaged Home Savings Accounts (HSAs). The accounts allow individuals to deduct contributions used for purchasing a principal residence or making excess principal payments on related mortgage debt.
Key Provisions
- Deduction and Limits: Individuals may deduct cash contributions to an HSA, capped at $10,000 per year ($20,000 for married couples filing jointly). Dependents claimed by another taxpayer are ineligible.
- Account Requirements: HSAs must be U.S.-based trusts meeting criteria such as cash-only contributions, qualified trustees (banks, insurers, or approved persons), no commingling of assets, and nonforfeitable beneficiary interests.
- Qualified Expenses: Funds cover buying a principal residence (defined under section 36(c)) or excess payments on acquisition indebtedness secured by the home, including certain refinancings.
- Tax Treatment: Contributions are deductible above the line. Earnings grow tax-free. Distributions for qualified expenses are tax-free; non-qualified distributions are taxable plus a 20% penalty (exceptions for disability or death). Excess contributions returned timely avoid penalties.
- Rollover and Transfers: One-time, tax-free rollovers between HSAs within 60 days (with a one-year limit on multiple rollovers). One lifetime direct transfer from an IRA is permitted, up to the annual limit. Divorce transfers preserve account status.
- Death Provisions: Surviving spouses inherit the account; other beneficiaries face immediate taxation on fair market value, with reductions for pre-death expenses paid within one year.
- Adjustments and Oversight: Limits adjust for inflation after 2027. Trustees must report contributions, distributions, and excess returns to the IRS and beneficiaries.
- Penalties: Excess contributions trigger excise taxes under section 4973. Prohibited transactions may cause account disqualification. Failure to file required reports incurs penalties under section 6693.
Significant Changes to Existing Law
- Adds new section 214 to the Internal Revenue Code for HSAs.
- Amends section 62(a) to treat the deduction as above-the-line.
- Modifies section 408(d) to permit one-time IRA-to-HSA transfers.
- Expands sections 4973, 4975, and 6693 to cover excess contributions, prohibited transactions, and reporting for HSAs.
- Applies to taxable years beginning after December 31, 2026.
Potential Impacts
- Citizens: Provides tax incentives for homeownership savings, potentially increasing home purchases or mortgage paydowns while reducing taxable income.
- Government Agencies: Increases IRS administrative workload for account oversight, reporting, and enforcement of contribution limits and qualified expenses.
- International Relations: No direct effects identified.
Main Stakeholders Affected
- Individual taxpayers saving for homeownership.
- Financial institutions and trustees administering HSAs.
- Homebuyers and mortgage holders.
- The Internal Revenue Service for tax administration and compliance.
Notable Legal, Constitutional, or Political Implications
- Relies on Congress's taxing and spending authority under Article I of the Constitution.
- Introduces a new tax-advantaged savings vehicle modeled on existing accounts, with rules for distributions, rollovers, and penalties.
- Includes inflation indexing and strict one-time IRA transfer limits to control costs and usage.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-06-25: Referred to the House Committee on Ways and Means.
- 2026-06-25: Introduced in House
- 2026-06-25: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to allow a deduction for amounts contributed to home savings accounts, and for other purposes. — issued 2026-06-25 — PDF (18 pages)