hold on there's just too much going on in Congress lmao...
Lets 529 funds pay for first home buying costs tax-free.
Rep. Patronis (R-FL) and Rep. Bilirakis (R-FL)
Introduced in House, referred to Ways and Means Committee.
The bill amends Section 529 of the tax code to allow penalty-free withdrawals from college savings accounts for qualified housing expenses if the beneficiary is a first-time homebuyer. This includes purchase costs, closing costs, and mortgage payments on a principal residence. A first-time homebuyer is someone who hasn't owned a home in the prior three years. The change applies to distributions after December 31, 2026.
Introduced Feb 5, 2026
This bill has been introduced in its chamber of Congress. It has been assigned a bill number and referred to a committee for review. Most bills never advance past this stage. The committee may hold hearings, gather expert testimony, and amend the bill before deciding whether to send it to the full chamber for a vote.
Currently, 529 plan withdrawals for non-education expenses are subject to income tax and a 10% penalty. This bill would remove that penalty for qualified housing expenses, but the earnings portion may still be subject to income tax unless otherwise exempt. The change is effective for withdrawals made after 2026, so it wouldn't apply immediately. Only first-time homebuyers (no home ownership in prior 3 years) can use this benefit.
Supporters Say
Supporters say it gives families more flexibility to use education savings for home buying, a key step to building wealth.
Critics Say
Critics argue it dilutes the original purpose of 529 plans—saving for education—and may reduce college funds.
Supporters, including the bill's sponsors, view this as expanding the utility of 529 plans to address housing affordability. Critics worry that allowing withdrawals for home buying could lead to less money for college, especially since tax incentives were designed for education. Some also raise concerns about potential misuse as a tax shelter.