First Home Savings Opportunity Act of 2025

Sponsor: Suhas Subramanyam (Democratic-VA)December 9, 2025

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Introduced

In Committee

Passed One Chamber

Passed Both Chambers

Signed into Law

Referred to the House Committee on Ways and Means.

Lets first-time homebuyers save for a down payment with new tax-free savings accounts.

This bill creates a new 'Down Payment Savings Account' (DPSA). It lets individuals save for a first home down payment and closing costs. Contributions are tax-deductible, and withdrawals for qualified expenses are tax-free, making saving easier.

What Would Change

Currently, there is no specific tax-advantaged savings account designed to help people save for a down payment on a first home. Contributions to regular savings accounts are not tax-deductible, and any interest earned is taxed. If this bill becomes law, individuals could open a Down Payment Savings Account (DPSA). They could deduct up to $10,000 per year ($20,000 for joint returns) for their cash contributions. Money withdrawn from a DPSA for qualified first home expenses would be tax-free, helping more people save for their first home.

Key Provisions

Lets people open special "Down Payment Savings Accounts" (DPSAs) to save for a first home.
Allows individuals to deduct up to $10,000 per year ($20,000 for joint returns) for cash contributions to a DPSA.
Makes withdrawals from a DPSA tax-free if used for a down payment or closing costs on a first home.
Requires account holders to be at least 18 years old and not have owned a main home in the last three years.
Reduces the tax deduction for individuals earning over $150,000 ($236,000 for joint returns).
Adds a 20 percent penalty tax on DPSA withdrawals not used for qualified first home expenses, with exceptions for death or disability.

View on Congress.gov

HR 6542 · 119th Congress · December 9, 2025 · AI Summary by gemini-2.5-flash · 10/10

First Home Savings Opportunity Act of 2025

What Would Change

Key Provisions

Lobbying Activity