The American Dream Accounts Act of 2026 creates a new tax-advantaged savings account designed to help individuals save for their first home purchase. U.S. citizens can contribute up to $7,500 per year to an American Dream Account (or $10,000 annually for those age 35 and older), with a lifetime contribution limit of $250,000. The accounts operate similarly to other tax-advantaged retirement savings accounts, with funds held in trust and administered by banks or other qualified institutions. When withdrawing funds to purchase a first home, account holders can take up to $500,000 tax-free (or $250,000 if purchasing jointly with another account holder), though they must hold the home for at least three years or face tax penalties. Account holders can also roll unused funds into Roth IRAs or pass accounts to family members without tax penalties. The legislation takes effect for tax years beginning after December 31, 2026.
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