Congress unlocks college savings for first-home buyers—but mainly helps the wealthy

What it does

This bill allows people to withdraw money from 529 college savings accounts to buy their first home, without the usual 10% tax penalty. The withdrawal must be used within 120 days to pay for a home purchase, and the bill also includes a special provision allowing disaster victims to recontribute withdrawn funds if their home purchase was delayed or cancelled due to a declared disaster.

Why we flagged it

The bill's core function is to expand the permitted uses of 529 education savings accounts to include first-home purchases, removing a tax penalty that previously discouraged this use. This is a straightforward tax-code amendment with a clear public-benefit intent.

What the text implies

• Reduces the effective cost of homeownership for families with 529 accounts, potentially widening the homeownership gap between higher-income households (more likely to have 529 savings) and lower-income households (less likely to have accumulated education savings).
• May reduce future tax revenue from 529 account withdrawals, though the magnitude depends on adoption rates and account balances.
• The 120-day window for using withdrawn funds creates a tight timeline that may disadvantage buyers in slower real-estate markets or those facing closing delays.
• Disaster relief provision creates a favorable tax treatment for disaster victims that may incentivize some to withdraw funds preemptively in anticipation of declared disasters, though the mechanism (recontribution) is designed to mitigate this.

Who it affects

First-time homebuyers gain access to tax-advantaged savings they accumulated for education, reducing barriers to homeownership and allowing more flexible use of their own money. The disaster relief provision provides genuine relief to people whose home purchases were disrupted by major disasters. There is no apparent cost to ordinary citizens.

Who stands to gain

• First-time homebuyers with 529 accounts
• Real estate developers and home sellers (increased buyer pool)
• Residential real estate investment trusts (REITs) and property management companies

Named in the bill

Internal Revenue Code Section 529, Internal Revenue Code Section 72, Internal Revenue Code Section 121, Robert T. Stafford Disaster Relief and Emergency Assistance Act, Federal Emergency Management Agency (FEMA), ABLE accounts, Qualified tuition programs

Where it stands

1 cosponsor: 1 Republicans.

• Feb 5, 2026 — Introduced · Congress.gov: “Introduced in House”
• Feb 5, 2026 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $14,580,000 in lobbying spend. A filing names 63 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Tim Moore, the sponsor, reported $499,450 in PAC receipts in the 2026 cycle.

• National Association of Realtors — $14,580,000 on 1 filing

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.