Home Savings Act

HR 7185, the Home Savings Act, allows individuals to exclude from taxable income certain retirement plan distributions used for down payments or closing costs when buying a principal residence. It applies to defined contribution plans (like 401(k)s), IRAs, annuity plans, and 457(b) plans, covering the individual or their eligible relatives (spouse, children, grandchildren, or ancestors). The exclusion is limited to distributions made after 2025 but expires for distributions after December 31, 2030. This policy change directly affects homebuyers using retirement savings for home purchases, reducing their taxable income for those specific expenses.