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104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB0148

Introduced 1/17/2025, by Sen. Cristina Castro

SYNOPSIS AS INTRODUCED:

New Act

Creates the Illinois Home Buyer Savings Accounts Act. Provides that a
first-time and second-chance home buyer may open an account with a
financial institution designated in its entirety by the financial
institution as a first-time and second-chance home buyer savings account.
Provides that the funds in a first-time and second-chance home buyer
savings account may be used only to pay a first-time and second-chance home
buyer's eligible costs for the purchase of a single-family residence in
Illinois. Provides that 2 first-time and second-chance home buyers may
jointly own a first-time and second-chance home buyer savings account.
Provides that only cash and marketable securities may be contributed to a
first-time and second-chance home buyer savings account. Sets forth
provisions concerning the responsibilities of an account holder; the
responsibilities of financial institutions; deduction of contributions,
exclusion of earnings, and limitations; the penalty for withdrawal for
purpose other than eligible costs; and the forms the Department of Revenue
must adopt.
LRB104 07697 BAB 17741 b

A BILL FOR

SB0148
LRB104 07697 BAB 17741 b
1

AN ACT concerning regulation.

2

Be it enacted by the People of the State of Illinois,
3
represented in the General Assembly:

4

Section 1.
Short title.
This Act may be cited as the
5
Illinois Home Buyer Savings Accounts Act.

6

Section 5.
Findings and purpose.
7

(a) The General Assembly finds that:
8

(1) The American Dream has always been closely
9

associated with owning your own home.
10

(2) It is becoming more and more difficult to achieve
11

the goal of homeownership in Illinois and throughout the
12

country.
13

(3) Homeownership provides more than a dream to an
14

individual person or family. An increase in homeownership
15

rates in Illinois has a direct positive impact on the
16

quality of our communities, our schools, our economy, and
17

public safety.
18

(b) The purpose of this Act is to:
19

(1) Make it easier for those in Illinois to achieve
20

their goal of homeownership for the first time.
21

(2) Provide a tax incentivized savings account for
22

qualified first-time and certain second-chance home
23

buyers, which, in turn, can be used toward a down payment

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LRB104 07697 BAB 17741 b
1

or certain eligible closing costs for the purchase of a
2

home in Illinois.

3

Section 10.
Definitions.
As used in this Act:
4

"Account holder" means a first-time and second-chance home
5
buyer who establishes, individually or jointly with another
6
first-time and second-chance home buyer, a first-time and
7
second-chance home buyer savings account.
8

"Allowable closing costs" means a disbursement listed on a
9
settlement statement for the purchase of a single-family
10
residence in Illinois by a first-time and second-chance home
11
buyer.
12

"Department" means the Department of Revenue.
13

"Eligible costs" means the down payment and allowable
14
closing costs for the purchase of a single-family residence in
15
Illinois by a first-time and second-chance home buyer.
16
"Eligible costs" does not include any costs incurred prior to
17
the establishment of a first-time and second-chance home buyer
18
savings account.
19

"Financial institution" means any bank, savings
20
institution, industrial loan association, credit union, or
21
other similar entity authorized to do business and accept
22
deposits in Illinois.
23

"First-time and second-chance home buyer" means an
24
individual who resides in Illinois and has not owned or
25
purchased, either individually or jointly, a single-family

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residence during a period of 10 years prior to the date of the
2
purchase of a single-family residence.
3

"First-time and second-chance home buyer savings account
4
or account" means an account with a financial institution
5
created for the purpose of payment or reimbursement of
6
eligible costs for the purchase of a single-family residence
7
in Illinois by a first-time and second-chance home buyer and
8
designated by the financial institution upon its creation as a
9
first-time and second-chance home buyer savings account.
10

"Settlement statement" means the statement of receipts and
11
disbursements for a transaction related to real estate,
12
including a statement prescribed under the federal Real Estate
13
Settlement Procedures Act of 1974 and regulations under that
14
Act.
15

"Single-family residence" means a single-family residence
16
owned and occupied by a first-time and second-chance home
17
buyer as the first-time and second-chance home buyer's
18
principal residence. "Single-family residence" includes, but
19
is not limited to, a manufactured home, a trailer, a mobile
20
home, a condominium unit, or a cooperative.

21

Section 15.
Establishment of a first-time and
22
second-chance home buyer savings account.
After the effective
23
date of this Act, a first-time and second-chance home buyer
24
may open an account with a financial institution designated in
25
its entirety by the financial institution as a first-time and

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LRB104 07697 BAB 17741 b
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second-chance home buyer savings account.

2

Section 20.
Use of a first-time and second-chance home
3
buyer savings account.
4

(a) Funds from a first-time and second-chance home buyer
5
savings account may be used only to pay a first-time and
6
second-chance home buyer's eligible costs for the purchase of
7
a single-family residence in Illinois.
8

(b) A first-time and second-chance home buyer may jointly
9
own a first-time and second-chance home buyer savings account
10
with another first-time and second-chance home buyer if the
11
joint account holders file a joint income tax return.
12

(c) Only cash and marketable securities may be contributed
13
to a first-time and second-chance home buyer savings account.
14
Subject to the limitations described in Section 35, persons
15
other than the account holder may contribute funds to a
16
first-time and second-chance home buyer savings account. There
17
is no limitation on the amount of contributions that may be
18
made to or retained in a first-time and second-chance home
19
buyer savings account.

20

Section 25.
Account holder responsibilities.
21

(a) The account holder shall do all the following:
22

(1) not use funds held in a first-time and
23

second-chance home buyer savings account to pay expenses
24

of administering the account, except that a service or

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other account fee may be deducted from the account by the
2

financial institution in which the account is held;
3

(2) submit the following to the Department with the
4

account holder's Illinois income tax return:
5

(A) detailed information, in a form prescribed by
6

the Department, regarding the first-time and
7

second-chance home buyer savings account, including a
8

list of transactions for the account during the tax
9

year; and
10

(B) the Form 1099 issued by the financial
11

institution for the account;
12

(3) submit to the Department, upon a withdrawal of
13

funds from a first-time and second-chance home buyer
14

savings account, a detailed account of the eligible costs
15

toward which the account funds were applied and a
16

statement of the amount of funds remaining in the account,
17

if any. If upon withdrawal of funds from the first-time
18

and second-chance home buyer savings account, the account
19

holder fails to provide the Department with the detailed
20

account of the eligible costs towards which the account
21

funds were applied, then the entire account's funds,
22

including the interest and other income on principal,
23

shall be subject to the penalties described in Section 40.
24

(b) Failure to submit the documentation required under
25
subsection (a) on an annual basis with the filing of the
26
Illinois income tax return shall result in the automatic

SB0148
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1
denial of the deduction and exclusion.

2

Section 30.
Responsibilities of financial institutions.
3

(a) A financial institution shall be required to:
4

(1) create a new account for the first-time and
5

second-chance home buyer and designate the account as a
6

"first-time and second-chance home buyer's savings
7

account" on records and transactional statements related
8

to the account; and
9

(2) provide the account holder with a detailed account
10

statement relating to the first-time and second-chance
11

home buyer's savings account on a yearly basis.
12

(b) A financial institution is not required to:
13

(1) track the use of money withdrawn from a first-time
14

and second-chance home buyer savings account;
15

(2) allocate funds in a first-time and second-chance
16

home buyer savings account between joint account holders;
17

and
18

(3) report any information not otherwise required by
19

law to the Department or any other governmental agency.
20

(c) A financial institution is not responsible or liable
21
for:
22

(1) determining or ensuring that an account satisfies
23

the requirements to be a first-time and second-chance home
24

buyer savings account;
25

(2) determining or ensuring that funds in a first-time

SB0148
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LRB104 07697 BAB 17741 b
1

and second-chance home buyer savings account are used for
2

eligible costs; or
3

(3) reporting or remitting taxes or penalties related
4

to the use of a first-time and second-chance home buyer
5

savings account.
6

(d) Upon being furnished proof of the death of the account
7
holder and any other information related to the death required
8
by the financial institution or contract governing the
9
first-time and second-chance home buyer savings account, a
10
financial institution shall distribute the principal and
11
accumulated interest or other income in the account in
12
accordance with the terms of the contract governing the
13
account or as otherwise required by law.

14

Section 35.
Deduction of contributions, exclusion of
15
earnings, and limitations.
16

(a) Except as otherwise provided in this Act and subject
17
to the limitations under this section, a first-time and
18
second-chance home buyer savings account holder shall be
19
entitled to a state tax deduction, subject to the limitations
20
of this Section, not to exceed $5,000 for an account holder who
21
files an individual tax return or $10,000 for joint account
22
holders who file a joint tax return, for contributions made by
23
the account holder to a first-time and second-chance home
24
buyer savings account during the tax year in which the
25
deduction is claimed.

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LRB104 07697 BAB 17741 b
1

(b) Except as otherwise provided in this Act and subject
2
to the limitations under this Section, earnings from the
3
first-time and second-chance home buyer savings account,
4
including interest and other income on the principal, shall be
5
excluded from taxable income of an account holder for Illinois
6
income tax purposes during the tax year.
7

(c) An account holder may claim the deduction and
8
exclusion under this Section as follows:
9

(1) for a period not to exceed 10 years;
10

(2) for an aggregate total amount of principal and
11

earnings not to exceed $25,000 for individual accounts and
12

$50,000 for joint accounts during the 10-year period;
13

(3) only if the principal and earnings of the account
14

remain in the account until a withdrawal is made for
15

eligible costs related to the purchase of a single-family
16

residence by a first-time and second-chance home buyer.
17

(d) A person other than the account holder who deposits
18
funds in a first-time and second-chance home buyer savings
19
account shall not be entitled to the deduction and exclusion
20
provided under this Act.
21

(e) The deduction and exclusion from taxable income
22
provided by this Act shall apply to any alternative basis for
23
calculating taxable income for Illinois income tax purposes.
24

(f) The funds in the first-time and second-chance home
25
buyer savings account shall not be used to purchase a
26
single-family residence outside of this State.

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Section 40.
Penalty for withdrawal for purpose other than
2
eligible costs.
Except as otherwise provided in this Section,
3
if the account holder withdraws any funds from a first-time
4
and second-chance home buyer savings account for a purpose
5
other than eligible costs for the purchase of a single-family
6
residence in this State, all of the following shall apply:
7

(1) The entire balance of the fund, including interest
8

and other income on principal, shall be included in the
9

account holder's taxable income for the tax year in which
10

the withdrawal was made.
11

(2) The account holder shall pay a penalty to the
12

Department equal to 10% of the amount withdrawn. The
13

penalty shall not apply to funds withdrawn from an account
14

which were:
15

(A) withdrawn by reason of the account holder's
16

death or disability or due to unemployment after the
17

account holder has exhausted his or her applicable
18

unemployment compensation benefits; or
19

(B) a disbursement of assets of the account
20

pursuant to a filing for protection under the United
21

States Bankruptcy Code.
22

Paragraphs (1) and (2) do not apply to funds withdrawn or
23
distributed from a first-time and second-chance home buyer
24
savings account that within 60 days of their withdrawal or
25
distribution are deposited in full into another first-time and

SB0148
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LRB104 07697 BAB 17741 b
1
second-chance home buyer savings account. This subdivision
2
shall apply both to transfers between any qualifying
3
first-time and second-chance home buyer savings accounts
4
whether such transfers are to or from qualifying individual or
5
joint accounts.

6

Section 45.
Department of revenue; forms.
The Department
7
shall adopt forms for the following:
8

(1) The designation of an account with a financial
9

institution to serve as a first-time and second-chance
10

home buyer savings account.
11

(2) An account holder to annually submit to the
12

Department detailed information regarding the first-time
13

and second-chance home buyer savings account, including,
14

but not limited to, a list of transactions for the account
15

during the tax year and identifying any supporting
16

documentation required to be maintained by the account
17

holder.

18

Section 50.
Annual report.
The Department shall submit an
19
annual report to the General Assembly no later than March 31 of
20
each calendar year with the first annual report due no later
21
than March 31, 2026, in which the Department shall include the
22
total annual number of deductions claimed and total amount of
23
deposits deducted pursuant to this Act, the number of
24
taxpayers who submitted an account to the Department pursuant

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LRB104 07697 BAB 17741 b
1
to paragraph (3) of subsection (a) of Section 25, and the
2
number of taxpayers who were subjected to the penalty
3
provisions of Section 40.

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