The "Next-Generation Equity Savings Tool Act," or NEST Act, proposes to amend the Internal Revenue Code of 1986 by creating First-Time Homebuyer Savings Accounts (FHSAs). These accounts are designed to assist individuals in saving for their first home by offering significant tax advantages. Contributions to an FHSA are tax-deductible , the account's earnings grow tax-exempt , and distributions used for qualified home ownership expenses are tax-free . To be eligible, an account beneficiary must not have had an ownership interest in a principal residence during the three-year period ending on the date of contribution and must be at least 18 years old. Contributions must be made in cash and are subject to a State threshold amount , which is 20 percent of the median home sale price in the state where the account is established. This threshold is adjusted annually to reflect current median home prices, but it can only increase, not decrease. Qualified home ownership expenses include costs to acquire, construct, or reconstruct a primary residence, such as down payments, financing, and other closing costs. If distributions are not used for these qualified expenses, they are included in the beneficiary's gross income and are subject to an additional 20 percent tax penalty , though exceptions apply in cases of the beneficiary's death. The accounts are generally exempt from taxation unless they cease to be FHSAs due to prohibited transactions or the acquisition of a principal residence. The bill also allows for employer contributions to FHSAs, which are excludable from the employee's gross income and exempt from various employment taxes, including Social Security, Railroad Retirement, and Unemployment taxes. Employers are required to report these contributions on W-2 forms. Penalties, such as a 6% excise tax, are imposed on excess contributions to prevent misuse of the accounts. Trustees of FHSAs are mandated to report account activities, including contributions and distributions, to the Secretary and the account beneficiary. These provisions are set to apply to taxable years beginning after December 31, 2025. The NEST Act aims to make homeownership more accessible by providing a structured and tax-advantaged savings vehicle for first-time homebuyers.