In an effort to assist Americans prepare for a down payment in the face of ongoing pressure on housing affordability, Sen. Rick Scott recently presented legislation that would establish a tax-advantaged savings account for first-time homebuyers.
The American Dream Accounts Act of 2026 would create “American dream accounts” under the federal tax code that could be used to save money for a first home. Individuals could typically contribute up to $7,500 annually under the law, while recipients over 35 could contribute up to $10,000. The maximum lifetime donation would be $250,000.
“I grew up in public housing and watched my family struggle to make ends meet,” Scott said. “For us, owning a home was out of reach because we couldn’t afford it. Today, so many Americans are facing that same struggle, especially young first-time buyers who view homeownership as a critical milestone to help them achieve their American Dream.”
What the bill will include:
- Allow first-time prospective home-buyers to contribute up to $7,500 a year ($10,000 if 35+ years old) to a Roth-IRA-style, untaxed savings account to be put toward their home purchase
- Cap lifetime contributions at $250,000
- Require that if a house is sold within 3-years of its American Dream Account-backed purchase, the withdrawn amount will become taxed (barring qualifying exceptions like military service or other life events), ensuring homes and tax-protected dollars are used for establishing primary residences, not quick flips
- Allow any unused money, up to $100,000, to be rolled over to a Roth-IRA or to a family member’s American Dream Account
- Require any money withdrawn for an unqualified purpose (ie not for a first-time home purchase) to be taxed and have an additional 10% tax applied
Federal income tax would not apply to money taken out of the accounts for a first-time home purchase that qualifies. A single buyer would be permitted to receive up to $500,000 in eligible payouts under the legislation, or up to $250,000 per person if two buyers jointly purchase a home and use the accounts. One eligible first-time homebuyer distribution would be the maximum number of beneficiaries under the law.
Restrictions intended to deter short-term use of the tax benefit are also included in the proposal. The previously untaxed amount would typically become taxable in the year of the sale if a house bought with an eligible distribution is sold within three years. Death, divorce, changes in family size, job loss, and certain employment relocations are among the situations for which the bill offers exceptions.
“[…] I am fighting every day to deliver real solutions that make housing more affordable for everyday Americans and make the dream of homeownership a reality,” Scott said. “Homeownership means stability and economic mobility. This bill will help first-time buyers save faster, and their money go farther to ease the financial barrier to homeownership for families.”
Scott also announced that the Foundation for Government Accountability also supports the bill. The policy, according to Tarren Bragdon, President and CEO of the organization, would provide families with an additional means of saving and accumulating wealth through homeownership.
“Owning a home is a fundamental part of the American Dream, yet millions are being priced out of homeownership,” Bragdon said. “The American Dream Accounts Act helps reverse that disturbing trend by giving families better tools to save, invest, lay down roots, and build for the future. We’re grateful to Senator Scott for championing policies that expand opportunity and restore the promise of the American Dream.”
If enacted, the legislation would apply to taxable years beginning after Dec. 31, 2026.
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