[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8709 Introduced in House (IH)]
<DOC>
119th CONGRESS
2d Session
H. R. 8709
To amend the Internal Revenue Code of 1986 to allow the establishment
of homeownership savings accounts.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 7, 2026
Ms. Stevens introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow the establishment
of homeownership savings accounts.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Homeownership Savings Act''.
SEC. 2. HOMEOWNERSHIP SAVINGS ACCOUNT.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section 223
the following new section:
``SEC. 223A. HOMEOWNERSHIP SAVINGS ACCOUNT.
``(a) Deduction Allowed.--In the case of an account beneficiary,
there shall be allowed as a deduction for the taxable year an amount
equal to the aggregate amount paid in cash during such taxable year by
or on behalf of such individual to a homeownership savings account of
such individual.
``(b) Limitations.--
``(1) Annual dollar limitation.--The amount allowable as a
deduction under subsection (a) to an individual for the taxable
year shall not exceed--
``(A) $3,000 in the case of a joint return,
``(B) $2,500 in the case of a head of household, or
``(C) $2,000 in the case of any other individual.
``(2) Limitation based on earned income.--
``(A) In general.--The amount allowable as a
deduction under subsection (a) shall not exceed such
individual's earned income for the taxable year.
``(B) Special rule for joint returns.--In the case
of an individual whose earned income is less than the
earned income of such individual's spouse and files a
joint return for the taxable year, the amount allowable
as a deduction under subsection (a) shall not exceed
the excess (if any) of--
``(i) the earned income of the taxpayer for
such taxable year, over
``(ii) the deduction allowable under
subsection (a) to such individual's spouse for
such taxable year.
``(C) Earned income.--For purposes of this
paragraph, the term `earned income' has the meaning
given such term in section 32(c)(2).
``(3) Limitation based on modified adjusted gross income.--
``(A) In general.--The maximum amount that may
otherwise be allowable as a deduction under subsection
(a) shall be reduced (but not below zero) by an amount
which bears the same ratio to such maximum amount as--
``(i) in the case of a joint return--
``(I) the excess (if any) of the
modified adjusted gross income of the
account beneficiary for such taxable
year over $242,000, bears to
``(II) $10,000,
``(ii) in the case of a head of household--
``(I) the excess (if any) of the
modified adjusted gross income of the
account beneficiary for such taxable
year over $200,000, bears to
``(II) $20,000, or
``(iii) in the case of any other
individual--
``(I) the excess (if any) of the
modified adjusted gross income of the
account beneficiary for such taxable
year over $153,000, bears to
``(II) $15,000.
``(B) Modified adjusted gross income.--For purposes
of this paragraph, the term `modified adjusted gross
income' means the adjusted gross income of the taxpayer
for the taxable year increased by any amount excluded
from gross income under section 911, 931, or 933.
``(4) Denial of deduction to dependants.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
``(c) Definitions and Special Rules.--For purposes of this
section--
``(1) Homeownership savings account.--The term
`homeownership savings account' means a trust created or
organized in the United States exclusively for the purpose of
paying the qualified homeownership expenses of the account
beneficiary (and designated as a homeownership savings account
at the time created or organized), but only if the written
governing instrument creating the trust meets the following
requirements:
``(A) No contribution will be accepted--
``(i) if such contribution would result in
lifetime aggregate contributions to the account
exceeding $40,000,
``(ii) unless it is in cash, or
``(iii) if such account beneficiary has not
made the certification required under
subparagraph (F).
``(B) The trustee is a bank (as defined in section
408(n)) or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
that person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust shall not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The account beneficiary has attained the age
of 18.
``(F) The account beneficiary certifies, under
penalty of perjury, at the time that the account is
established that such account beneficiary would be a
first-time homebuyer with respect to a purchase of a
principal residence on the date of such establishment.
``(2) Qualified homeownership expenses.--The term
`qualified homeownership expenses' means a down payment or
closing costs relating to the purchase of the primary residence
of the account beneficiary of a homeownership savings account
if such account beneficiary is a first-time homebuyer.
``(3) No contribution for individual who is not a first-
time homebuyer.--In the case of an individual who would not be
a first-time homebuyer with respect to a purchase of a
principal residence on the date of any contribution to a
homeownership savings account, paragraph (1)(A)(i) shall be
applied by substituting `$0' for `$40,000'.
``(4) First-time homebuyer.--The term `first-time
homebuyer' means an individual if--
``(A) such individual is a first-time homebuyer (as
defined in section 36(c)(1)), and
``(B) such individual has never purchased a
residential property using an amount which was excluded
from the gross income of such individual by reason of
subsection (e)(1).
``(5) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the homeownership savings
account is established.
``(6) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Section 219(f)(5) (relating to employer
payments).
``(D) Section 408(g) (relating to community
property laws).
``(d) Tax Treatment of Accounts.--
``(1) In general.--A homeownership savings account is
exempt from taxation under this subtitle unless such account
has ceased to be a homeownership savings account.
Notwithstanding the preceding sentence, any such account is
subject to the taxes imposed by section 511 (relating to
imposition of tax on unrelated business income of charitable,
etc. organizations).
``(2) Account terminations.--
``(A) Acquisition of principal residence.--If the
account beneficiary acquires an ownership interest in a
principal residence--
``(i) each homeownership savings account of
such beneficiary shall cease to be a
homeownership savings account as of the close
of the 60-day period beginning on the date of
such acquisition, and
``(ii) the balance of such account as of
such date shall be treated as distributed to
such beneficiary.
``(B) Prohibited transactions, etc.--Rules similar
to the rules of paragraphs (2) and (4) of section
408(e) shall apply to any homeownership savings
account, and any amounts treated as distributed under
such rules shall be treated as not used to pay
qualified homeownership expenses.
``(e) Tax Treatment of Distributions.--
``(1) Amounts used for qualified homeownership expenses.--
Any amount paid or distributed out of a homeownership savings
account which is used exclusively to pay qualified
homeownership expenses of any account beneficiary shall not be
includible in gross income.
``(2) Inclusion of amounts not used for qualified
homeownership expenses.--Any amount paid or distributed out of
a homeownership savings account which is not used exclusively
to pay the qualified homeownership expenses of the account
beneficiary shall be included in the gross income of such
beneficiary.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any homeownership
savings account of an individual, paragraph (2) shall
not apply to distributions from the homeownership
savings accounts of such individual (to the extent such
distributions do not exceed the aggregate excess
contributions to all such accounts of such individual
for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution if--
``(i) after such contribution, the
aggregate contribution to homeownership savings
accounts of the account beneficiary exceeds the
amount in effect under subsection (c)(1)(A)(i),
or
``(ii) if the amount of such contribution
is not allowable as a deduction by reason of
paragraph (2)(A) or (3)(a) of subsection (b).
``(4) Additional tax for distributions not used for
homeownership expenses.--
``(A) In general.--The tax imposed by this chapter
for any taxable year on any taxpayer who receives a
payment or distribution from a homeownership savings
account which is includible in gross income shall be
increased by 20 percent of the amount which is so
includible.
``(B) Exceptions.--Subparagraph (A) shall not apply
if the payment or distribution is--
``(i) made to the account beneficiary (or
to the estate of such account beneficiary) on
or after the death of such account beneficiary,
or
``(ii) attributable to such account
beneficiary's being disabled (within the
meaning of section 72(m)(7)).
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
following requirements:
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from a homeownership
savings account to the account beneficiary to the
extent the amount received is paid into a homeownership
savings account for the benefit of such beneficiary not
later than the 60th day after the day on which the
beneficiary receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from a homeownership savings account if,
at any time during the 1-year period ending on the day
of such receipt, such individual received any other
amount described in subparagraph (A) from a
homeownership savings account which was not includible
in the individual's gross income because of the
application of this paragraph.
``(6) Special rules for death and divorce.--Rules similar
to the rules of paragraphs (7) and (8) of section 223(f) shall
apply for purposes of this section.
``(7) Disallowance of excluded amounts as deduction,
credit, or exclusion.--No deduction, credit, or exclusion shall
be allowed to the taxpayer under any other section of this
chapter for any qualified homeownership expenses to the extent
taken into account in determining the amount of the exclusion
under paragraph (1).
``(f) Salary Reduction Prohibited.--No employer shall directly
reduce the wages or salary of an employee by reason of a contribution
made by such employer to a homeownership savings account on behalf of
such employee.
``(g) Inflation Adjustment.--
``(1) In general.--In the case of any taxable year
beginning after 2026, the dollar amounts in subsection (b)
shall be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost of living adjustment determined
under section 1(f)(3) for the calendar year in which
the taxable year begins, determined by substituting
`calendar year 2024' for `calendar year 2016' in
subparagraph (ii) thereof.
``(2) Rounding.--If any increase under paragraph (1) is not
a multiple of $100, such increase shall be rounded to the
nearest multiple of $100.
``(h) Reports.--
``(1) In general.--The trustee of a homeownership savings
account shall make such reports regarding such account to the
Secretary and to the account beneficiary with respect to
contributions, distributions, and such other matters as the
Secretary may require.
``(2) Rollover distributions.--In the case of any
distribution described in subsection (e)(5), the officer or
employee having control of the homeownership savings account
(or their designee) shall provide a report to the trustee of
the homeownership savings account to which the distribution is
made. Such report shall include information with respect to the
contributions, distributions, and earnings of the homeownership
savings account as of the date of the distribution described in
such subsection, together with such other matters as the
Secretary may require.
``(3) Time and manner.--The reports required by this
subsection shall be filed at such time and in such manner and
furnished to such individuals at such time and in such manner
as the Secretary determines appropriate.''.
(b) Deduction Allowed Above the Line.--Section 62(a) of such Code
is amended by inserting after paragraph (21) the following new
paragraph:
``(22) Homeownership savings accounts.--The deduction
allowed by section 223A.''.
(c) Exclusions for Employer Contributions to Homeownership Savings
Accounts.--
(1) Exclusion from income tax.--
(A) In general.--Part III of subchapter B of
chapter 1 of such Code is amended by inserting after
section 139I the following new section:
``SEC. 139J. HOMEOWNERSHIP SAVINGS ACCOUNT CONTRIBUTIONS.
``In the case of an account beneficiary (as defined in section
223A(c)(5)), gross income does not include amounts contributed by such
account beneficiary's employer to any homeownership savings account (as
defined in section 223A(c)(1)) of such account beneficiary if such
contribution, taken in aggregate with all other contributions in all
taxable years to homeownership savings accounts (as so defined) of such
beneficiary, does not exceed