A new legislative proposal, the Universal Savings Account (USA) Act, has been introduced in both chambers of Congress. The bill aims to create a savings account that combines the tax benefits of a Roth IRA with the flexibility of a traditional savings account.
Texas Senator Ted Cruz and Representative Diana Harshbarger of Tennessee, both Republicans, are leading this initiative. The proposed accounts would allow individuals to contribute up to $10,000 annually and withdraw their savings without taxation or penalties.
Cruz emphasized the simplicity and accessibility of the plan: “A simple and accessible incentive savings plan will provide families with a way to establish financial security and prosperity.” Harshbarger described it as “commonsense” reform that removes bureaucratic barriers: “The Universal Savings Account Act cuts through red tape and gives every American a flexible, tax-free way to save, invest, and spend—without government interference or penalties.”
According to the bill’s text, these accounts would be trust accounts where contributions are made in cash. Withdrawals could be made at any time for any purpose without age limits or penalties. Money withdrawn from these accounts would not be subject to federal taxation.
The initial contribution limit is set at $10,000 per year but will increase by $500 annually until it caps at $25,000. There are no income-based contribution limits.
In comparison with Roth IRAs—which have early withdrawal penalties and income eligibility caps—the USA offers more flexibility. While Roth IRAs have an annual contribution limit of $7,000 for 2025, USAs start at $10,000.
Investment options within USA accounts exclude life insurance contracts but offer untaxed growth potential compared to high-yield savings accounts which offer taxed returns around 4–5 percent.
The Tax Foundation supports this move stating that current tax-advantaged savings options are complex and restrictive. They describe USAs as offering unrestricted use of funds without penalty or excessive paperwork.
The act has been referred to both the House Ways Committee and the Senate Finance Committee for further consideration.
