The "Homeownership Savings Act" introduces Homeownership Savings Accounts (HSAs) , amending the Internal Revenue Code to help individuals save for a first home. These accounts are established as trusts exclusively for paying qualified homeownership expenses, offering a significant tax incentive for prospective first-time homebuyers. Individuals can make tax-deductible cash contributions to their HSA, subject to annual limits of $3,000 for joint filers, $2,500 for heads of household, and $2,000 for other individuals. These deductions are also limited by earned income and begin to phase out for higher-income taxpayers based on their modified adjusted gross income. A crucial provision sets a lifetime aggregate contribution limit of $40,000 to an HSA. To be eligible, an account beneficiary must be at least 18 years old and certify they would be a first-time homebuyer at the time of account establishment. Qualified homeownership expenses are defined as down payments or closing costs related to the purchase of the account beneficiary's primary residence. HSAs are tax-exempt, and distributions used for these qualified expenses are not included in gross income. Conversely, distributions not used for qualified homeownership expenses are included in gross income and are subject to an additional 20 percent tax , with exceptions for death or disability. Employer contributions to HSAs are excluded from an employee's gross income and various employment taxes, but must be reported on W-2 forms. The bill also includes provisions for handling excess contributions, imposing a 6 percent excise tax, and outlines rules for prohibited transactions. Annual dollar limits for contributions will be adjusted for inflation starting in 2027, with the act applying to taxable years beginning after December 31, 2026.