This bill modifies the existing framework for first-time homebuyer savings accounts in Iowa by allowing employers to establish and contribute to these accounts on behalf of their employees. Specifically, it introduces provisions that enable employer account holders to make contributions that can be deducted from the employee's individual income tax when used for eligible home costs related to a qualified home purchase. However, unlike individual account holders, employers are not permitted to deduct their contributions from their own income taxes. The bill also stipulates that any funds withdrawn for purposes other than purchasing a home will incur a 10% penalty for employer account holders, similar to the penalties imposed on individual account holders.

Additionally, the bill includes several amendments to existing tax code sections, such as clarifying the definitions of account holders and beneficiaries, and establishing rules for the withdrawal of funds. It specifies that the account must be closed after ten years if not used for a home purchase, and it applies retroactively to tax years beginning on or after January 1, 2026. Overall, the legislation aims to enhance the accessibility of first-time homebuyer savings accounts by incorporating employer contributions while maintaining tax benefits for individual taxpayers.

Statutes affected:
Introduced: 422.7, 422.35, 541B.2, 541B.3, 422.21