WeVote
Log In

Bill

Bill

HR 6542

First Home Savings Opportunity Act of 2025

119th Congress Introduced by Ashley Hinson and 3 co-sponsors

Creates a tax-advantaged Down Payment Savings Account for first-time buyers with deductions up to $10k ($20k joint) and MAGI-based limits for qualified home purchases.

Sponsor introductory remarks on measure. (CR H5062)
0
WeVote Research Nonpartisan
Bill Summary · HR 6542

Summary: First Home Savings Opportunity Act of 2025 (H.R. 6542)

Overview

  • Bill number: H.R. 6542
  • Title: First Home Savings Opportunity Act of 2025
  • Introduced: December 9, 2025
  • Sponsor: Rep. Subramanyam (with Reps. Hinson, Thanedar, Norton); cosponsor Rep. Ashley Hinson
  • Committee referral: Ways and Means
  • Status: Introduced; sponsor introductory remarks recorded in the Congressional Record (CR H5062)

Purpose and intent

The bill creates a new tax-advantaged savings vehicle, the Down Payment Savings Account, intended to help individuals accumulate funds for a first-time home purchase. It authorizes a deduction for amounts contributed to a designated down payment savings account and provides specific rules to ensure the accounts are used for qualified home-buying expenses and not diverted to other purposes.

Key provisions

Establishment and eligibility

  • Creates a “down payment savings account” (DPSA), a trust organized in the United States, dedicated to paying qualified down payment expenses for the account beneficiary.
  • The account must be designated as a DPSA at creation and meet several requirements:
    • Contributions must be cash and made by the account beneficiary.
    • No ownership interest in a principal residence by the account beneficiary in the 3-year period ending on the contribution date.
    • The trustee must be a bank (as defined in 408(n)) or another qualified entity that demonstrates compliance with the section.
    • No investments in life insurance contracts.
    • Assets must not be commingled with other property outside a common trust fund or investment fund.
    • The account beneficiary must be at least 18 years old.
  • Qualified down payment expenses include down payments or closing costs for the purchase of the beneficiary’s principal residence, provided the purchaser is a first-time homebuyer (as defined in section 36(c) of the code).

Deduction and limitations

  • Deductions: The taxable year deduction for an account beneficiary equals the aggregate cash contributions to their DPSA for that year.
  • Contribution limit: The deduction is capped at the lesser of:
    • The taxpayer’s earned income for the year, or
    • $10,000 ($20,000 for a joint return).
  • Phaseout (reduction of the deduction for higher incomes): The deduction is phased out based on modified adjusted gross income (MAGI) with a formula tied to thresholds:
    • Phaseout begins when MAGI exceeds $150,000 ($236,000 for joint filers) and reduces the deduction proportionally to the excess amount.
    • MAGI is defined as AGI plus amounts excluded from gross income under sections 911, 931, or 933.
  • Interaction with other deductions: The bill includes rules that limit, for example, any deduction in cases where another deduction under section 151 would apply to someone else in the same tax year.

Definitions and rules

  • Principal residence: same meaning as used in section 121 (the main home deduction context).
  • Other rules referenced for DPSA treatment align with existing rules for individual retirement accounts and tax-treated savings arrangements (e.g., treatment of rollovers, timing of contributions, and employer payment considerations).

Tax treatment of distributions

  • Distributions used exclusively for qualified down payment expenses are excluded from gross income.
  • Distributions not used for qualified down payment expenses are included in gross income of the beneficiary.
  • If excess contributions are returned before the due date of the tax return, distributions may be treated under specific protections to avoid unintended tax consequences.

Inflation adjustments

  • Beginning after 2025, several dollar amounts in the deduction and related provisions are adjusted for inflation using the cost-of-living adjustment (COLA) mechanism, with rounding rules to the nearest $100.

Effects and impact

  • Aims to increase savings for first-time home purchases by offering a dedicated, tax-davored down payment fund.
  • Targets individuals with earned income, subject to annual deduction caps and income phaseouts.
  • Encourages tax planning around first-time home purchases, with money in DPSAs growing tax-advantaged when used for qualified down payment expenses.
  • Alters the landscape of qualified savings vehicles by creating a new, regulated trust construct with specific governance and investment restrictions.

Timing and procedural notes

  • Introduced in the 119th Congress on December 9, 2025.
  • Referred to the House Committee on Ways and Means for consideration.
  • Reflects sponsor introductory remarks recorded in the Congressional Record on the same date.

If you’d like, I can compare this proposal to existing first-time homebuyer programs or draft a one-page policy brief outlining potential fiscal impacts and administrative considerations.

Compiled from official sources — confirm details with the bill’s official record.

Sign in to ask a question.