H.R.3186 - Universal Savings Account Act of 2025 (119th Congress)
Summary
H.R.3186, the Universal Savings Account Act of 2025, proposes to amend the Internal Revenue Code of 1986 by creating Universal Savings Accounts (USAs). These accounts would be exempt from federal income tax, similar to Roth IRAs, but with potentially higher contribution limits. The bill outlines contribution rules, distribution guidelines, and tax implications for excess contributions and prohibited transactions.
Expected Effects
The creation of Universal Savings Accounts could incentivize individuals to save more for retirement or other long-term goals. This may lead to increased personal savings rates and potentially reduce reliance on government-funded social programs in the future. The Act also introduces new reporting requirements for trustees of these accounts.
Potential Benefits
- Encourages personal savings by providing a tax-advantaged savings vehicle.
- Offers flexibility in using savings for any purpose without penalty (unlike some retirement accounts).
- Could potentially reduce reliance on social security and other government programs.
- May stimulate investment and economic activity as savings accumulate.
- Simplifies savings by consolidating different savings options into a single account type.
Potential Disadvantages
- May disproportionately benefit higher-income individuals who have the means to contribute the maximum amount.
- Could complicate the tax code with another type of savings account, adding to existing options like 401(k)s and IRAs.
- Potential for abuse if not properly regulated, such as using the accounts for tax shelters.
- May reduce current tax revenue for the government, at least in the short term.
- The contribution limits, while initially higher, may not keep pace with inflation effectively, reducing their real value over time.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the Constitution is primarily based on Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8. The creation of tax-advantaged savings accounts falls under this power. The Sixteenth Amendment, which allows Congress to levy an income tax, is also relevant, as this bill modifies the application of income tax laws.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).