College savings now double as down-payment funds for first-time homebuyers

What it does

This bill allows people to withdraw money from 529 college savings plans (tax-advantaged education accounts) to buy their first home, without the usual tax penalty, up to $35,000 lifetime per person. The money must have been in the account for at least 15 years, and if the home purchase falls through, the money can be returned to the account within 120 days. If the person sells the home or stops living in it within 5 years, they owe back taxes on the withdrawal, reduced by 20% for each year they kept the home.

Why we flagged it

The bill's core mechanism is a targeted tax exemption for a specific use (home purchase) of existing savings vehicles (529 plans), benefiting a defined population (first-time homebuyers) without creating new spending or direct subsidies.

What the text implies

• The $35,000 lifetime cap per beneficiary may disproportionately benefit higher-income households that accumulate larger 529 balances; lower-income families with smaller accounts may see less relative benefit.
• The 15-year account-holding requirement means only families who began saving for college at least 15 years ago can access this benefit, excluding recent savers and those without prior education savings.
• The 5-year recapture period creates a lock-in effect: homebuyers who must relocate for employment or family reasons within 5 years face unexpected tax bills, potentially discouraging geographic mobility.
• Coordination with existing Roth IRA rollover limits (subparagraph E) may create complexity for beneficiaries managing multiple account types, though the bill attempts to address this through aggregate limitation adjustments.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

First-time homebuyers gain access to accumulated savings without tax penalty, lowering the cost of homeownership and reducing barriers to entry into the housing market. The recapture mechanism (repayment of taxes if the home is sold within 5 years) is a reasonable safeguard that does not eliminate the benefit for those who keep their homes.

Who stands to gain

• first-time homebuyers (primary beneficiary)
• families with accumulated 529 education savings

Named in the bill

Internal Revenue Code of 1986, Section 529 (qualified tuition programs), Section 36 (first-time homebuyer credit), ABLE accounts, Roth IRAs

Where it stands

10 cosponsors: 8 Republicans, 2 Democrats.

• Feb 10, 2026 — Introduced · Congress.gov: “Introduced in House”
• Feb 10, 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

2 lobbying clients named this bill on 2 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $50,000 in lobbying spend. A filing names 11 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 41% of bills with at least one filing.

Tracey Mann, the sponsor, reported $633,750 in PAC receipts in the 2026 cycle.

• Ascensus, Inc. — $30,000 on 1 filing
• National Assn of State Treasurers (nast) — $20,000 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.