Nebraska lawmakers have approved a proposal aimed at helping more residents achieve homeownership by making it easier to save for upfront housing costs.
The First-Time Homebuyer Savings Account Act, originally introduced as Legislative Bill 938, was included as part of a broader tax package passed by the Legislature and sent to Governor Jim Pillen for consideration. The measure was brought forward on behalf of State Treasurer Joey Spellerberg and introduced by State Senator Bob Hallstrom, with support from more than one-third of Nebraska lawmakers.
If signed into law, the plan would allow Nebraskans to open specialized savings accounts beginning January 1, 2027, designed specifically to help cover the cost of purchasing or building a first home.
Under the proposal, individuals would be able to contribute up to $5,000 per year, with a lifetime limit of $25,000. Married couples filing jointly could contribute up to $10,000 annually, with a lifetime cap of $50,000. Contributions would be fully deductible from Nebraska income taxes, and interest or investment earnings would grow tax-free as long as the funds are used for eligible expenses.
Those eligible expenses include down payments, closing costs, and fees associated with buying or building a primary residence in Nebraska, such as appraisals, inspections, and mortgage origination costs. The accounts could also be used for certain financing-related costs tied to new home construction within the state.
Lawmakers say the bill is intended to address a growing barrier to homeownership: the rising cost of entering the housing market. Over the past decade, Nebraska’s median home price has increased from about $155,000 to roughly $290,000. At the same time, first-time homebuyers now account for just 21 percent of home purchases nationwide, down from a historical average closer to 40 percent. The average age of a first-time homebuyer has also risen to 40 years old, compared to about 30 in 2010.
Supporters of the measure say the savings accounts are designed to help more Nebraskans build the financial foundation needed to purchase a home, particularly younger buyers struggling to keep up with rising costs.
State estimates show a single taxpayer earning $70,000 annually could save approximately $1,100 in state income taxes over five years by maximizing the account’s contribution limits. A married couple earning a combined $100,000 could see an estimated $2,200 in tax savings over the same period.
The bill includes safeguards intended to prevent misuse of the accounts. Tax benefits could be recaptured if funds are withdrawn within one year of the first deposit or used for non-qualified expenses, and additional penalties may apply in those cases. Account holders would also be required to report contributions and withdrawals to the Nebraska Department of Revenue when filing state income taxes.
A first-time homebuyer is defined under the measure as someone who has never owned a primary residence, or someone who has not been listed on a property title for at least three years following a divorce.
If enacted, Nebraska would join at least a dozen other states that offer similar tax-advantaged savings programs to help residents prepare for homeownership.