I 
119TH CONGRESS 
1ST SESSION H. R. 6542 
To amend the Internal Revenue Code of 1986 to allow the establishment 
of down payment savings accounts. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 9, 2025 
Mr. SUBRAMANYAM (for himself, Mrs. HINSON, Mr. THANEDAR, and Ms. 
NORTON) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to allow the 
establishment of down payment savings accounts. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘First Home Savings 
Opportunity Act of 2025’’. 
SEC. 2. DOWN PAYMENT SAVINGS ACCOUNT. 
(a) IN GENERAL.—Part VII of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting after section 223 the following new section: 
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‘‘SEC. 223A. DOWN PAYMENT SAVINGS ACCOUNT. 
‘‘(a) DEDUCTION ALLOWED.—In the case of an ac-
count beneficiary, there shall be allowed as a deduction 
for the taxable year an amount equal to the aggregate 
amount paid in cash during such taxable year by such in-
dividual to a down payment savings account of such indi-
vidual. 
‘‘(b) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) DOWN PAYMENT SAVINGS ACCOUNT.—The 
term ‘down payment savings account’ means a trust 
created or organized in the United States exclusively 
for the purpose of paying the qualified down pay-
ment expenses of the account beneficiary (and des-
ignated as a down payment savings account at the 
time created or organized), but only if the written 
governing instrument creating the trust meets the 
following requirements: 
‘‘(A) No contribution will be accepted— 
‘‘(i) if such contribution is not made 
by the account beneficiary, 
‘‘(ii) if the account beneficiary had an 
ownership interest in a principal residence 
at any time during the 3-year period end-
ing on the date of the contribution, or 
‘‘(iii) unless it is in cash. 
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‘‘(B) The trustee is a bank (as defined in 
section 408(n)) or another person who dem-
onstrates to the satisfaction of the Secretary 
that the manner in which that person will ad-
minister the trust will be consistent with the re-
quirements of this section. 
‘‘(C) No part of the trust assets will be in-
vested in life insurance contracts. 
‘‘(D) The assets of the trust shall not be 
commingled with other property except in a 
common trust fund or common investment 
fund. 
‘‘(E) The account beneficiary has attained 
the age of 18. 
‘‘(2) QUALIFIED DOWN PAYMENT EXPENSES.— 
The term ‘qualified down payment expenses’ means 
a down payment or closing costs for the purchase of 
the principal residence of the account beneficiary of 
a down payment savings account if such account 
beneficiary is a first-time homebuyer (as defined in 
section 36(c)) with respect to such purchase. 
‘‘(3) ACCOUNT
BENEFICIARY.—The term ‘ac-
count beneficiary’ means the individual on whose be-
half the down payment savings account is estab-
lished. 
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‘‘(4) CERTAIN RULES TO APPLY.—Rules similar 
to the following rules shall apply for purposes of this 
section: 
‘‘(A) Section 219(d)(2) (relating to no de-
duction for rollovers). 
‘‘(B) Section 219(f)(3) (relating to time 
when contributions deemed made). 
‘‘(C) Section 219(f)(5) (relating to em-
ployer payments). 
‘‘(D) Section 408(g) (relating to commu-
nity property laws). 
‘‘(5) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121. 
‘‘(c) LIMITATIONS.— 
‘‘(1) CONTRIBUTION
LIMIT.—The amount al-
lowable as a deduction under subsection (a) to any 
individual for any taxable year shall not exceed the 
lesser of— 
‘‘(A) the taxpayer’s earned income (as de-
fined in section 32(c)(2)) for the taxable year, 
or 
‘‘(B) $10,000 ($20,000 in the case of a 
joint return). 
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‘‘(2) PHASEOUT
BASED
ON
MODIFIED
AD-
JUSTED GROSS INCOME.— 
‘‘(A) IN GENERAL.—The deduction allow-
able under subsection (a) shall be reduced by 
an amount which bears the same ratio to the 
amount of such deduction as— 
‘‘(i) the excess (if any) of— 
‘‘(I) the taxpayer’s modified ad-
justed gross income, over 
‘‘(II) $150,000 ($236,000 in the 
case of a joint return), bears to 
‘‘(ii) $50,000 ($79,000 in the case of 
a joint return). 
‘‘(B) MODIFIED
ADJUSTED
GROSS
IN-
COME.—For purposes of subparagraph (A), the 
term ‘modified adjusted gross income’ means 
the adjusted gross income of the taxpayer for 
the taxable year increased by any amount ex-
cluded from gross income under section 911, 
931, or 933. 
‘‘(3) DENIAL
OF
DEDUCTION
TO
DEPEND-
ENTS.—No deduction shall be allowed under this 
section to any individual with respect to whom a de-
duction under section 151 is allowable to another 
taxpayer for a taxable year beginning in the cal-
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endar year in which such individual’s taxable year 
begins. 
‘‘(4) INFLATION ADJUSTMENT.— 
‘‘(A) IN
GENERAL.—In the case of any 
taxable year beginning after 2025, each of the 
dollar amounts in this subsection shall be in-
creased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for the cal-
endar year in which the taxable year be-
gins, determined by substituting ‘calendar 
year 2024’ for ‘calendar year 2016’ in sub-
paragraph (A)(ii) thereof. 
‘‘(B) ROUNDING.—If any increase under 
paragraph (1) is not a multiple of $100, such 
increase shall be rounded to the nearest mul-
tiple of $100. 
‘‘(d) TAX TREATMENT OF DISTRIBUTIONS.— 
‘‘(1) AMOUNTS
USED
FOR
QUALIFIED
DOWN 
PAYMENT EXPENSES.—Any amount paid or distrib-
uted out of a down payment savings account which 
is used exclusively to pay qualified down payment 
expenses of any account beneficiary shall not be in-
cludible in gross income. 
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‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR 
QUALIFIED
DOWN
PAYMENT
EXPENSES.—Any 
amount paid or distributed out of a down payment 
savings account which is not used exclusively to pay 
the qualified down payment expenses of the account 
beneficiary shall be included in the gross income of 
such beneficiary. 
‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE-
FORE DUE DATE OF RETURN.— 
‘‘(A) IN
GENERAL.—If any excess con-
tribution is contributed for a taxable year to 
any down payment savings account of an indi-
vidual, paragraph (2) shall not apply to dis-
tributions from the down payment savings ac-
counts of such individual (to the extent such 
distributions do not exceed the aggregate excess 
contributions to all such accounts of such indi-
vidual for such year) if— 
‘‘(i) such distribution is received by 
the individual on or before the last day 
prescribed by law (including extensions of 
time) for filing such individual’s return for 
such taxable year, and 
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‘‘(ii) such distribution is accompanied 
by the amount of net income attributable 
to such excess contribution. 
Any net income described in clause (ii) shall be 
included in the gross income of the individual 
for the taxable year in which it is received. 
‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution to a down 
payment savings account (other than a rollover 
contribution described in paragraph (5)) which 
is not deductible under this section. 
‘‘(4) ADDITIONAL TAX FOR DISTRIBUTIONS NOT 
USED FOR DOWN PAYMENT EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter for any taxable year on any tax-
payer who receives a payment or distribution 
from a down payment savings account which is 
includible in gross income shall be increased by 
20 percent of the amount which is so includible. 
‘‘(B) 
EXCEPTIONS.—Subparagraph 
(A) 
shall not apply if the payment or distribution 
is— 
‘‘(i) made to the account beneficiary 
(or to the estate of such account bene-
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ficiary) on or after the death of such ac-
count beneficiary, or 
‘‘(ii) attributable to such account 
beneficiary’s being disabled (within the 
meaning of section 72(m)(7)). 
‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the following requirements: 
‘‘(A) IN
GENERAL.—Paragraph (2) shall 
not apply to any amount paid or distributed 
from a down payment savings account to the 
account beneficiary to the extent the amount 
received is paid into a down payment savings 
account for the benefit of such beneficiary not 
later than the 60th day after the day on which 
the beneficiary receives the payment or distribu-
tion. 
‘‘(B) LIMITATION.—This paragraph shall 
not apply to any amount described in subpara-
graph (A) received by an individual from a 
down payment savings account if, at any time 
during the 1-year period ending on the day of 
such receipt, such individual received any other 
amount described in subparagraph (A) from a 
down payment savings account which was not 
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includible in the individual’s gross income be-
cause of the application of this paragraph. 
‘‘(6) SPECIAL
RULES
FOR
DEATH
AND
DI-
VORCE.—Rules similar to the rules of paragraphs 
(7) and (8) of section 223(f) shall apply for pur-
poses of this section. 
‘‘(7) DISALLOWANCE OF EXCLUDED AMOUNTS 
AS DEDUCTION, CREDIT, OR EXCLUSION.—No deduc-
tion, credit, or exclusion shall be allowed to the tax-
payer under any other section of this chapter for any 
qualified down payment expenses to the extent taken 
into account in determining the amount of the exclu-
sion under paragraph (1). 
‘‘(8) ACCOUNT TERMINATION.—Rules similar to 
the rules of paragraphs (2) and (4) of section 408(e) 
shall apply to down payment savings accounts, and 
any amount treated as distributed under such rules 
shall be treated as not used to pay qualified down 
payment expenses. 
‘‘(e) REPORTS.— 
‘‘(1) IN GENERAL.—The trustee of a down pay-
ment savings account shall make such reports re-
garding such account to the Secretary and to the ac-
count beneficiary with respect to contributions, dis-
tributions, and such other matters as the Secretary 
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may require. The reports required by this subsection 
shall be filed at such time and in such manner and 
furnished to such individuals at such time and in 
such manner as may be required. 
‘‘(2) ROLLOVER DISTRIBUTIONS.—In the case 
of any distribution described in subsection (d)(5), 
the officer or employee having control of the down 
payment savings account (or their designee) shall 
provide a report to the trustee of the down payment 
savings account to which the distribution is made. 
Such report shall be filed at such time and in such 
manner as the Secretary may require and shall in-
clude information with respect to the contributions, 
distributions, and earnings of the down payment 
savings account as of the date of the distribution de-
scribed in such subsection, together with such other 
matters as the Secretary may require.’’. 
(b) DEDUCTION ALLOWED
TO NON-ITEMIZERS.— 
Section 63(b) of such Code is amended— 
(1) in paragraph (6), by striking ‘‘and’’ and in-
serting a comma, 
(2) in paragraph (7), by striking the period at 
the end and inserting ‘‘, and’’, and 
(3) by adding at the end the following new 
paragraph: 
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‘‘(8) the deduction allowed by section 223A.’’. 
(c) TAX ON PROHIBITED TRANSACTIONS.— 
(1) Section 4975(c) of such Code is amended by 
adding at the end the following new paragraph: 
‘‘(8) SPECIAL RULE FOR DOWN PAYMENT SAV-
INGS ACCOUNTS.—An individual for whose benefit a 
down payment savings account (within the meaning 
of section 223A(b)(1)) is established shall be exempt 
from the tax imposed by this section with respect to 
any transaction concerning such account (which 
would otherwise be taxable under this section) if, 
with respect to such transaction, the account ceases 
to be a down payment savings account by reason of 
the application of section 223(c)(8) to such ac-
count.’’. 
(2) Section 4975(e)(1) of such Code is amended 
by striking ‘‘or’’ at the end of subparagraph (F), by 
redesignating subparagraph (G) as subparagraph 
(H), and by inserting after subparagraph (F) the 
following new subparagraph: 
‘‘(G) a down payment savings account de-
scribed in section 223A(b)(1).’’. 
(d) PENALTY FOR FAILURE TO FILE REPORTS.— 
Section 6693(a)(2) of such Code is amended by striking 
‘‘and’’ at the end of subparagraph (E), by striking the 
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period at the end of subparagraph (F) and inserting ‘‘, 
and’’, and by inserting after subparagraph (F) the fol-
lowing new subparagraph: 
‘‘(G) Section 223A(g) (relating to down 
payment savings accounts).’’. 
(e) CONFORMING AMENDMENTS.— 
(1) Section 26(b)(2) of such Code is amended 
by striking ‘‘and’’ at the end of subparagraph (Y), 
by striking the period at the end of subparagraph 
(Z) and inserting ‘‘, and’’, and by inserting after 
subparagraph (Z) the following new subparagraph: 
‘‘(AA) section 223A(c)(2) (relating to addi-
tional tax on down payment savings account not 
used for qualified down payment expenses).’’. 
(2) Section 877A of such Code is amended— 
(A) in subsection (e)(2) by inserting ‘‘a 
down payment savings account (as defined in 
section 223A),’’ after ‘‘section 223),’’, and 
(B) in subsection (g)(6) by inserting 
‘‘223(e)(4),’’, after ‘‘529A(c)(3),’’. 
(3) The table of sections for part VII of sub-
chapter B of chapter 1 of such Code is amended by 
inserting after the item relating to section 223 the 
following new item: 
‘‘Sec. 223A. Down payment savings account.’’. 
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