‘‘(B) EXCESS
CONTRIBUTION.—For pur-
poses of subparagraph (A), the term ‘excess 
contribution’ means any contribution (other 
than a rollover contribution described in para-
graph (5)) which is not deductible under this 
section. 
‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT 
USED
FOR
QUALIFIED
DISASTER
AND
PUBLIC 
HEALTH EMERGENCY EXPENSES.— 
‘‘(A) IN GENERAL.—The tax imposed by 
this chapter on the account beneficiary for any 
taxable year in which there is a payment or dis-
tribution from an emergency savings account of 
such beneficiary which is includible in gross in-
come under paragraph (2) shall be increased by 
20 percent of the amount which is so includible. 
‘‘(B) EXCEPTION
FOR
DISABILITY
OR 
DEATH.—Subparagraph (A) shall not apply if 
the payment or distribution is made after the 
account beneficiary becomes disabled within the 
meaning of section 72(m)(7) or dies. 
‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 
described in this paragraph as a rollover contribu-
tion if it meets the requirements of subparagraphs 
(A) and (B). 
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‘‘(A) IN
GENERAL.—Paragraph (2) shall 
not apply to any amount paid or distributed 
from an emergency savings account to the ac-
count beneficiary to the extent the amount re-
ceived is paid into an emergency savings ac-
count 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 an 
emergency savings account if, at any time dur-
ing the 1-year period ending on the day of such 
receipt, such individual received any other 
amount described in subparagraph (A) from an 
emergency savings account which was not in-
cludible in the individual’s gross income because 
of the application of this paragraph. 
‘‘(g) COST-OF-LIVING ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning in a calendar year after 2021, each 
$5,000 amount in subsection (b) and the $3,000 
amount in subsection (d)(4) shall be increased by an 
amount equal to— 
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‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which such taxable year begins deter-
mined by substituting ‘calendar year 2020’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(2) ROUNDING.—If any increase under para-
graph (1) is not a multiple of $50, such increase 
shall be rounded to the nearest multiple of $50. 
‘‘(h) SPECIAL RULES.— 
‘‘(1) 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-
endar year in which such individual’s taxable year 
begins. 
‘‘(2) TAXABLE YEAR MUST BE FULL TAXABLE 
YEAR.—Except in the case of a taxable year closed 
by reason of the death of the taxpayer, no deduction 
shall be allowed under this section in the case of a 
taxable year covering a period of less than 12 
months. 
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‘‘(3) 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). 
‘‘(E) Section 408(h) (relating to custodial 
accounts). 
‘‘(F) Section 223(f)(7) (relating to transfer 
of account incident to divorce). 
‘‘(G) Section 223(f)(8) (relating to treat-
ment after death of account beneficiary). 
‘‘(4) COORDINATION WITH CASUALTY LOSS DE-
DUCTION.—No deduction shall be allowed under sec-
tion 165 for a loss for which a disaster recovery ex-
pense payment is made from an emergency savings 
account. 
‘‘(i) REPORTS.—The Secretary may require the trust-
ee of an emergency savings account to make such reports 
regarding such account to the Secretary and to the ac-
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count beneficiary with respect to contributions, distribu-
tions, the return of excess contributions, and such other 
matters as the Secretary determines appropriate.’’. 
(b) DEDUCTION ALLOWED WHETHER OR NOT INDI-
VIDUAL ITEMIZES OTHER DEDUCTIONS.—Section 62(a) 
of such Code is amended by inserting after paragraph (21) 
the following new paragraph: 
‘‘(22) EMERGENCY
SAVINGS
ACCOUNTS.—The 
deduction allowed by section 224.’’. 
(c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 
of such Code (relating to tax on excess contributions to 
certain tax-favored accounts and annuities) is amended— 
(1) by striking ‘‘or’’ at the end of subsection 
(a)(5), by inserting ‘‘or’’ at the end of subsection 
(a)(6), and by inserting after subsection (a)(6) the 
following new paragraph: 
‘‘(7) an emergency savings account (within the 
meaning of section 224(d)),’’; and 
(2) by adding at the end the following new sub-
section: 
‘‘(i) EXCESS CONTRIBUTIONS TO EMERGENCY SAV-
INGS ACCOUNTS.—For purposes of this section, in the 
case of emergency savings accounts (within the meaning 
of section 224(d)), the term ‘excess contributions’ means 
the sum of— 
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‘‘(1) the aggregate amount contributed for the 
taxable year to the accounts (other than a rollover 
contribution described in section 224(f)(5)) which is 
not allowable as a deduction under section 224 for 
such year, and 
‘‘(2) the amount determined under this sub-
section for the preceding taxable year, reduced by 
the sum of— 
‘‘(A) the distributions out of the accounts 
which were included in gross income under sec-
tion 224(f)(2), and 
‘‘(B) the excess (if any) of— 
‘‘(i) the maximum amount allowable 
as a deduction under section 224(b) for 
the taxable year, over 
‘‘(ii) the amount contributed to the 
accounts for the taxable year. 
For purposes of this subsection, any contribu-
tion which is distributed out of the emergency 
savings account in a distribution to which sec-
tion 224(f)(3) applies shall be treated as an 
amount not contributed.’’. 
(d) FAILURE TO PROVIDE REPORTS ON EMERGENCY 
SAVINGS ACCOUNTS.—Section 6693(a)(2) of such Code is 
amended by redesignating subparagraphs (D), (E), and 
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