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To amend the Internal Revenue Code of 1986 to exclude from gross income certain retirement plan distributions used for a down payment or closing costs for a principal residence, and for other purposes.
Summary
The Home Savings Act allows individuals to make tax-free withdrawals from certain retirement accounts to pay for down payments or closing costs on a principal residence. The exemption applies to defined contribution plans, IRAs, annuity plans, and 457(b) plans, and covers both the account holder's own home purchase and that of eligible relatives including spouses, children, grandchildren, and ancestors. Distributions used for these housing expenses are excluded from gross income and are not subject to gift taxes when transferred to relatives. The provision is temporary and applies only to distributions made through the end of 2030. The changes take effect for distributions made after December 31, 2025.
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Sponsor (1)
5 cosponsors
Actions (2)
- Jan 21, 2026 Referred to the House Committee on Ways and Means. · house
- Jan 21, 2026 Introduced in House
Similar bills (6)
Bills with similar text or summary — includes reintroductions across Congresses. Ranked by semantic similarity of the bill text (computed locally); a neutral discovery aid, not a claim the bills are duplicates.
Full text
IN THE HOUSE OF REPRESENTATIVES
January 21, 2026
Mr. McGuire 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 exclude from gross income certain retirement plan distributions used for a down payment or closing costs for a principal residence, and for other purposes.
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 “Home Savings Act”.
SEC. 2. EXCLUSION FROM GROSS INCOME OF RETIREMENT PLAN DISTRIBUTIONS USED FOR A DOWN PAYMENT OR CLOSING COSTS FOR A PRINCIPAL RESIDENCE.
(a) In General.—
(1) Defined contribution plans.—Section 402 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:
“(m) Distributions for a Down Payment or Closing Costs for a Principal Residence.—
“(1) In general.—The gross income of an employee for any taxable year shall not include any distribution from a defined contribution plan of such employee to the extent that such distribution is used for a down payment or closing costs associated with acquiring a principal residence of—
“(A) the employee, or
“(B) an eligible relative of the employee.
“(2) Definitions.—For purposes of this subsection—
“(A) Eligible relative.—The term ‘eligible relative’ means, with respect to any employee—
“(i) the spouse of the employee, or
“(ii) any child, grandchild, or ancestor of—
“(I) the employee, or
“(II) the spouse of the employee.
“(B) Defined contribution plan.—The term ‘defined contribution plan’ has the meaning given the term in section 414(i).
“(C) Principal residence.—The term ‘principal residence’ has the same meaning as when used in section 121.
“(3) Application of section 72.—Rules similar to the rules of section 408(d)(10)(C) shall apply for purposes of this subsection, by taking into account all amounts in the defined contribution plan to which the employee has nonforfeitable right in lieu of all amounts in all individual retirement plans of the individual.
“(4) Gift tax treatment.—So much of any transfer of a distribution described in paragraph (1) by the employee to an eligible relative as is used by such eligible relative for a down payment or closing costs associated with acquiring a principal residence of such eligible relative shall not be treated as a gift for purposes of section 2503(a).
“(5) Termination date.—Paragraph (1) shall not apply to distributions made in taxable years beginning after December 31, 2030.”.
(2) Certain annuity plans.—Section 403 of such Code is amended by adding at the end the following new subsection:
“(d) Distributions for a Down Payment or Closing Costs for a Principal Residence.—
“(1) In general.—The rules of section 402(m) shall apply to distributions under an annuity plan described in subsection
(a) or an annuity contract described in subsection (b).
“(2) Termination date.—Paragraph (1) shall not apply to distributions made in taxable years beginning after December 31, 2030.”.
(3) Individual retirement plans.—Section 408(d) of such Code is amended by adding at the end the following new paragraph:
“(10) Distributions for a down payment or closing costs for a principal residence.—
“(A) In general.—The gross income of an individual for any taxable year shall not include any distribution from an individual retirement plan of such individual to the extent that such distribution is used for a down payment or closing costs associated with acquiring a principal residence of—
“(i) the individual, or
“(ii) an eligible relative of the individual.
“(B) Definitions.—For purposes of this paragraph—
“(i) Eligible relative.—The term ‘eligible relative’ means, with respect to any individual—
“(I) the spouse of the individual, or
“(II) any child, grandchild, or ancestor of— “(aa) the individual, or “(bb) the spouse of the individual.
“(ii) Individual retirement plan.—The term ‘individual retirement plan’ has the meaning given the term in section 7701.
“(iii) Principal residence.—The term ‘principal residence’ has the same meaning as when used in section 121.
“(C) Application of section 72.—Notwithstanding section 72, in determining the extent to which a distribution is used for a down payment or closing costs pursuant to subparagraph (A), the entire amount of the distribution shall be treated as includible in gross income without regard to such subparagraph to the extent that such amount does not exceed the aggregate amount which would have been so includible if all amounts in all individual retirement plans of the individual were distributed during such taxable year and all such plans were treated as 1 contract for purposes of determining under section 72 the aggregate amount which would have been so includible. Proper adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.
“(D) Gift tax treatment.—So much of any transfer of a distribution described in subparagraph (A) by the individual to an eligible relative as is used by such eligible relative for a down payment or closing costs associated with acquiring a principal residence of such eligible relative shall not be treated as a gift for purposes of section 2503(a).
“(E) Termination date.—Subparagraph (A) shall not apply to distributions made in taxable years beginning after December 31, 2030.”.
(4) 457(b) plans.—Section 457(e) of such Code is amended by adding at the end the following new paragraph:
“(19) Distributions for a down payment or closing costs for a principal residence.—
“(A) In general.—The rules of section 402(m) shall apply to distributions under an eligible deferred compensation plan established and maintained by an employer described in paragraph (1)(A).
“(B) Termination date.—Subparagraph (A) shall not apply to distributions made in taxable years beginning after December 31, 2030.”.
(b) Effective Date.—The amendments made by this section shall apply to distributions made in taxable years beginning after December 31, 2025. <all>
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