Bill · S. 1581· Senate(119-S-1581)
Universal Savings Account Act of 2025
- Introduced
- 5/1/2025
- Last activity
- 5/1/2025 — Read twice and referred to the Committee on Finance.
- Sponsored by
- Ted Cruz
- Cosponsors
- - 1 - 0
- Introduced
- In Committee
What this bill would do
The Universal Savings Account Act of 2025 creates a new type of trust called a Universal Savings Account. These accounts are generally exempt from taxation and are created for the exclusive benefit of an individual. The bill sets specific rules for how much money can be contributed annually and how funds can be distributed. It also establishes guidelines for trustees, rollovers, and the handling of accounts after the holder dies. Finally, it introduces taxes for excess contributions and penalties for prohibited transactions.
Yes· 3 of 15
Would high-income households be better off under this?+6
Highest utility for those who can maximize annual contributions to avoid taxes.
Would people with substantial wealth be better off under this?+6
Allows for tax-sheltered growth of additional capital.
Would middle-income households be better off under this?+5
Significant benefit from tax-free savings and distributions.
The opposite
Does this reduce what the federal government owes?-2
Tax-exempt accounts reduce federal tax revenue, potentially increasing the deficit.
Does this make the government pay for what it commits to?-1
Creates a new tax expenditure in the internal revenue code.
Who it would affect, and how
Potential Positive Impacts for People
-
Tax-Free Status: Universal Savings Accounts are exempt from taxation, which could help individuals save money more effectively (Section 530A(a)).
-
Tax-Free Distributions: Most distributions from these accounts are not included in gross income (Section 530A(c)(2)(A)).
-
Spousal Protection: If an account holder dies, the surviving spouse can take over the account and be treated as the account holder (Section 530A(e)(1)).
-
Flexible Rollovers: Individuals can move funds from one Universal Savings Account to another without penalty if done within 60 days (Section 530A(d)).
Potential Negative Impacts for People
-
Contribution Limits: There is a cap on how much an individual can contribute annually, starting at $10,000 plus specific increases, but not to exceed $25,000 (Section 530A(c)(1)).
-
Taxes on Excess Contributions: People who contribute more than the allowed limit may face taxes on those excess amounts (Section 4973(i)).
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Investment Restrictions: These accounts cannot be used to invest in life insurance contracts (Section 530A(b)(5)).
-
Taxable Income on Specific Distributions: Any distribution of net income related to excess contributions must be included in the holder's gross income (Section 530A(c)(2)(B)).
Groups and Interests Ranking
Every group the model scored this bill for, from -10 to +10. Hover a score for the reason it gave.
- Demographic And Interest Groups
- Good For High Income Households+6Good For High Net Worth Individuals+6Good For Middle Class Households+5Good For Ultra High Net Worth Individuals+5Good For Billionaires+4Good For Middle Aged+4Good For Young Adults+4Good For Business Owners+3Good For Retirees+3Good For Seniors+3Good For Students+3Good For Children+2Good For Low Income Households+1
- Economy And Finance
- Reduces Middle Class Taxes+3Improves Economic Growth+2Reduces National Debt-2Improves Fiscal Responsibility-1
- 5/8/2025
- 1 Cosponsor added.
- 5/1/2025
- Read twice and referred to the Committee on Finance.
- Introduced in Senate
One bill Congress.gov lists as related to this one — companions in the other chamber, earlier versions, and bills this one absorbed or was folded into.
James JusticeRepublican · West Virginia