Universal Savings Account Act of 2025

This bill establishes Universal Savings Accounts, which are tax-advantaged savings accounts that allow contributions up to a certain amount, exempt earnings and distributions from federal income taxes, and allow distributions to be used for any purpose. (Conditions and exceptions apply.)

Specifically, the bill allows cash contributions to a Universal Savings Account of up to $10,000 in 2025 (maximum base contribution), excluding qualified amounts rolled over from another tax-advantaged account (e.g., individual retirement account). The maximum base contribution amount is increased by $500 each year beginning in 2026 and adjusted annually for inflation, up to a total maximum contribution of $25,000 (also adjusted annually for inflation beginning in 2026).

Under the bill, earnings and distributions from a Universal Savings Account are excluded from gross income for federal tax purposes and, thus, are not subject to federal income taxes (similar to the federal tax treatment of distributions from a Roth individual retirement account). (Some exceptions apply.)

Further, distributions from such accounts are not restricted and may be used for any purpose (unlike other types of tax-advantaged accounts currently available).

The bill also imposes

• a federal excise tax on contributions to a Universal Savings Account in excess of the applicable contribution limit,
• a federal excise tax on certain transactions involving a Universal Savings Account and disqualified persons,
• certain reporting requirements on Universal Savings Account trustees, and
• a federal excise tax for failing to meet such reporting requirements.