Universal Savings Account Act of 2025

The Universal Savings Account Act of 2025 introduces Universal Savings Accounts (USAs) into the Internal Revenue Code, establishing a new tax-exempt savings mechanism for individuals. These accounts are designed as trusts or custodial accounts, requiring cash contributions and ensuring the individual's interest is non-forfeitable. All investment growth within a USA and subsequent distributions from it are generally exempt from taxation, providing a significant tax advantage for savers. Annual contributions to USAs are initially capped at $10,000 , with an additional $500 increase each year after 2024, subject to cost-of-living adjustments and an overall maximum of $25,000 , which is also inflation-adjusted. While most distributions are tax-free, net income attributable to excess contributions may be taxable. The bill also details provisions for qualified rollovers between USAs, the treatment of accounts upon the death of the account holder, and imposes taxes on excess contributions and prohibited transactions to ensure compliance.