The Universal Savings Account Act would create a new type of tax-advantaged account where contributions are made with money that has already been taxed, but any earnings and all withdrawals — at any time, for any reason — are completely tax-free. Unlike a Roth IRA or 529 college-savings plan, there are no restrictions on what the money can be spent on. The annual contribution limit starts at ten thousand dollars and rises by five hundred dollars each year with an additional inflation adjustment, up to a maximum of twenty-five thousand dollars. No income limits are set in the bill, meaning anyone can open an account regardless of how much they earn.
Average Household Impact
- Tax-free savings vehicle — New Universal Savings Accounts exempt earnings and withdrawals from income tax for any spending purpose
- Annual contribution limit — Starts at $10,000, grows by $500 per year plus inflation adjustments, capped at $25,000
Congressional Summary
Universal Savings Account Act of 2025This bill establishes Universal Savings Accounts, which are tax-advantaged savings accounts that allow contributions up to a certain amount, exempt earnings and distributions from federal income taxes, and allow distributions to be used for any purpose. (Conditions and exceptions apply.)Specifically, the bill allows cash contributions to a Universal Savings Account of up to $10,000 in 2025 (maximum base contribution), excluding qualified amounts rolled over from another tax-advantaged account (e.g., individual retirement account). The maximum base contribution amount is increased by $500 each year beginning in 2026 and adjusted annually for inflation, up to a total maximum contribution of $25,000 (also adjusted annually for inflation beginning in 2026).Under the bill, earnings and distributions from a Universal Savings Account are excluded from gross income for federal tax purposes and, thus, are not subject to federal income taxes (similar to the federal tax treatment of distributions from a Roth individual retirement account). (Some exceptions apply.)Further, distributions from such accounts are not restricted and may be used for any purpose (unlike other types of tax-advantaged accounts currently available).The bill also imposes a federal excise tax on contributions to a Universal Savings Account in excess of the applicable contribution limit,a federal excise tax on certain transactions involving a Universal Savings Account and disqualified persons,certain reporting requirements on Universal Savings Account trustees, anda federal excise tax for failing to meet such reporting requirements.
Details
- Congress
- 119th
- Chamber
- Senate
- Status
- summarized
- Action
- Introduced in Senate
- Action Date
- 2025-05-01
- Date Added
- 2026-06-13
- Source
- Congress.gov →
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