Bill
Bill > SF2326
IA SF2326
IA SF2326A bill for an act modifying first-time homebuyers savings accounts, and including retroactive applicability provisions.
summary
Introduced
02/12/2026
02/12/2026
In Committee
02/12/2026
02/12/2026
Crossed Over
Passed
Dead
Introduced Session
91st General Assembly
Bill Summary
Currently, individuals may open an interest-bearing savings account and designate the account as a first-time homebuyer savings account (account) for the purpose of financing the purchase of a single-family residence in this state by a first-time homebuyer. The account may be established individually, or jointly with a spouse if the married couple files a joint Iowa income tax return. The contributions to the account are deductible from the individual income tax. Currently, contributions are deductible in the amount of $4,744 for married persons, and $2,372 for individuals, and any interest in the account accrues state tax free. This bill modifies the account by allowing an employer (employer account holder) to open an account on behalf of an employee and make contributions to the account on behalf of an employee who is a first-time homebuyer. The bill specifies the amount of funds withdrawn from the account that are contributed by the employer account holder that are used by an individual taxpayer to purchase a home as a first-time homebuyer are deductible against the individual income tax by the individual taxpayer. Unlike individual account holders, the bill prohibits an employer account holder from taking a deduction against income taxes for any contributions made to the account. In the same manner as individual account holders, the bill assesses a penalty against an employer account holder in the amount of 10 percent of any withdrawal amount if the amount is withdrawn for a purpose other than for a purchase by a first-time homebuyer. The penalty is not assessed upon death of the first-time homebuyer, change of employment status with the first-time homebuyer and the employer account holder, or upon withdrawals made pursuant to a garnishment, levy, or bankruptcy. The bill and current law require the account to be closed after a period of 10 years, and the account is subject to penalties and tax if the moneys in the account are not used in the purchase of a home by a first-time homebuyer within the 10-year period. The bill applies retroactively to tax years beginning on or after January 1, 2026.
AI Summary
This bill modifies existing law regarding first-time homebuyer savings accounts, which are interest-bearing accounts used to finance the purchase of a home by a first-time homebuyer, with contributions currently deductible from individual income tax. The key change allows an employer to open and contribute to such an account on behalf of an employee who is a first-time homebuyer, with the employee able to deduct the employer's contributions when used for a qualified home purchase. However, employers cannot deduct their contributions, and both individual and employer account holders face a 10% penalty on withdrawals for non-qualifying purposes, with exceptions for death, change in employment, or legal actions like garnishment or bankruptcy. These accounts must generally be closed after 10 years, with penalties applied if funds are not used for a home purchase within that timeframe. The bill also clarifies that an employer account holder can only change the designated beneficiary if the employee's employment status changes. These provisions apply retroactively to tax years beginning on or after January 1, 2026.
Committee Categories
Budget and Finance
Sponsors (1)
Last Action
Subcommittee: Zumbach, Donahue, and Kraayenbrink. S.J. 361. (on 02/23/2026)
Official Document
bill text
bill summary
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bill summary
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bill summary
| Document Type | Source Location |
|---|---|
| State Bill Page | https://www.legis.iowa.gov/legislation/BillBook?ga=91&ba=SF2326 |
| BillText | https://www.legis.iowa.gov/docs/publications/LGI/91/attachments/SF2326.html |
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