The First-time Homebuyer Savings Account Act of 2026 creates a new tax-advantaged savings account that allows first-time homebuyers to set aside money specifically for purchasing or improving a home. Eligible individuals—those who have not owned a home in the past three years—can make tax-deductible contributions up to their annual IRA limit (currently $7,000) or 20 percent of the national average home price, whichever is less, though contributions phase out for higher-income individuals. Money withdrawn from these accounts to pay for qualified homeownership expenses, such as down payments, closing costs, or home repairs, is not subject to income tax, though withdrawals for other purposes face a 10 percent penalty plus regular income taxes. The bill takes effect for tax years beginning after its enactment and allows some flexibility through hardship exemptions for job loss, medical emergencies, and other life events, as well as the ability to roll over funds between accounts.
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