American Dream Accounts Act of 2026

This bill creates American Dream Accounts, which are tax-advantaged savings accounts designed to help eligible U.S. citizens save for purchasing a first home. The accounts allow contributions up to $7,500 annually (or $10,000 for those aged 35 or older) with tax-free growth and tax-free withdrawals when used to buy a first home, subject to a $500,000 lifetime limit on qualified distributions. Funds must be kept in a bank or qualified trustee, cannot be invested in life insurance, and cannot be commingled with other property. Withdrawals for purposes other than qualified first-time home purchases are subject to income tax and a 10% penalty. The bill also establishes rules for rollovers between accounts, reporting requirements, and penalties for excess contributions or prohibited transactions.