First-Time Homebuyer Savings Act of 2026

Tax Deductions for Savings: Eligible individuals can deduct the amount of cash they pay into a first-time homebuyer savings account for the taxable year, which reduces their taxable income. (Sec. 2(a))

Tax-Free Use of Funds: Money taken out of the account to pay for "qualified homebuyer expenses," such as purchasing or constructing a principal residence and related transaction costs, is not included in the beneficiary's gross income. (Sec. 2(b)(3) and 2(e)(1))

Flexible Fund Transition: After acquiring a home, individuals can transfer funds from the savings account into an individual retirement account within a specific 180-day window. (Sec. 2(g)(1))

Payroll Tax Exemption: Payments made to these accounts are not treated as wages, meaning they are excludible from certain taxes. (Sec. 2(b))

Income Restrictions: People with an adjusted gross income over $200,000 (or $400,000 for joint returns) cannot take the tax deduction. (Sec. 2(d))

Financial Penalties: If funds are distributed for reasons other than qualified expenses, rollovers, or specific transfers, the amount is included in gross income and is subject to an additional 10 percent tax. (Sec. 2(e)(2))

Contribution Caps: There is a strict limit of $10,000 per calendar year on total contributions to these accounts. (Sec. 2(c))

Strict Eligibility Timeline: To be an "eligible individual," the person and their spouse must not have had an ownership interest in a residential property during the 3-year period ending on the present date. (Sec. 2(b)(2))