American Dream Accounts Act of 2026

The American Dream Accounts Act of 2026 proposes the creation of a new type of tax-advantaged savings account specifically designed for first-time homebuyers. Under this plan, individuals under the age of 35 could contribute up to $7,500 annually, while those 35 and older would have a higher "catch-up" limit of $10,000 per year. These accounts would function similarly to a Roth IRA, where contributions are made with after-tax dollars, but the growth and qualified withdrawals for a home purchase would be tax-free. The bill aims to help citizens build the necessary capital for a down payment more quickly by shielding their investment gains from federal income tax.

To ensure the accounts are used for long-term residency rather than real estate speculation, the legislation includes a provision requiring the home to be held for at least three years. If a house purchased with these funds is sold sooner, the withdrawn amount would become subject to taxation, with exceptions for major life events or military service. Additionally, any funds withdrawn for non-housing purposes would face standard income taxes plus a 10% penalty. If a saver decides not to buy a home, the bill allows them to roll over up to $100,000 of the account balance into a Roth IRA or transfer the funds to a family member's American Dream Account.