S. 1581 · Where this bill is now
In committee
Introduced in the Senate, May 1, 2025
What this bill does
In plain words · AI-written from the official summaryNew tax-free savings accounts with no restrictions
This bill creates Universal Savings Accounts, a new type of savings account where you can set aside money and never pay federal income tax on the money you earn or withdraw from it. You can contribute up to $10,000 per year starting in 2025, with the limit growing by $500 each year, and you can use the money for anything you want—unlike some other tax-advantaged accounts that restrict what you can spend the money on.
How it affects you
If you open a Universal Savings Account, you'd be able to grow your savings without paying federal taxes on the earnings, which could help you build wealth over time. The account is flexible since you can withdraw money whenever you need it for any reason, making it different from retirement accounts with strict rules.
Read the official summary (Introduced in Senate, May 1, 2025)
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.
Written by AI (Claude) using only the official summary by the Congressional Research Service, the Library of Congress’s nonpartisan research staff. It can miss nuance, so check the official summary and the bill text for details.
1st SessionS. 1581
A BILL
Universal Savings Account Act of 2025
Sponsor: Sen. Ted Cruz (R-TX) · Introduced May 1, 2025 · Taxation · 1 version of the text
Sources: Congress.gov actions and votes · bill text from GovInfo · latest official action May 1, 2025: “Read twice and referred to the Committee on Finance.”