The proposed bill introduces the "First-Time Homebuyer Savings Account Act" as a new chapter in Title 44 of the General Laws concerning taxation. This act allows individuals who are first-time homebuyers to establish a first-time homebuyer savings account with Rhode Island housing specifically for the purpose of saving money to cover eligible costs associated with purchasing a home in Rhode Island.

The bill defines key terms such as "account holder," "qualified beneficiary," "eligible costs," and "allowable closing costs." It establishes the responsibilities of account holders, which include not using funds for account administration expenses, submitting detailed information regarding their accounts to the division of taxation, and ensuring that funds are used solely for eligible costs related to the purchase of a home.

The act provides tax benefits for contributions made to these savings accounts. Account holders can deduct contributions from their taxable income, with annual deductions capped at $15,000 for individuals and $30,000 for joint filers. Earnings from the account are excluded from taxable income, subject to certain limitations. The act also specifies that if funds are withdrawn for purposes other than eligible costs, a penalty will be imposed, including inclusion of the withdrawn amount in taxable income and a 10% penalty on the amount withdrawn.

The act is designed to encourage homeownership among first-time buyers in Rhode Island and will take effect upon passage.