Congress raises first-time homebuyer retirement withdrawal limit to $25,000
H.R. 2748 — First Time Homeowner Savings Plan Act · Filed by Haley Stevens (D-MI) · Introduced Apr 8, 2025 · Referred to committee
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What it does
This bill increases the amount first-time homebuyers can withdraw penalty-free from retirement accounts (IRAs and similar plans) from $10,000 to $25,000, and indexes that limit to inflation annually starting in 2026. Ordinary people saving for a first home gain access to more of their own retirement savings without tax penalty; the change takes effect for withdrawals after December 31, 2025.
Why we flagged it
The bill's sole operative mechanism is a straightforward increase in the penalty-free withdrawal limit for a specific class of taxpayers (first-time homebuyers) from retirement accounts, paired with an inflation adjustment. It is a targeted tax-code amendment designed to ease access to down-payment capital.
What the text implies
- Increases federal revenue loss (foregone tax on larger withdrawals) unless offset by increased homeownership and associated economic activity.
- May disproportionately benefit higher-income savers who have accumulated larger retirement balances; lower-income workers may lack sufficient retirement savings to benefit even at the higher limit.
The full analysis lists 3 implications of this text.
Who stands to gain
first-time homebuyers (individuals); real estate and mortgage lending sectors (indirect, via increased down-payment capacity)