A new bill introduced in Congress could pave the way for a more flexible and tax-free way for Americans to save money. The Universal Savings Account (USA) Act, recently introduced by Senator Ted Cruz of Texas and Representative Diana Harshbarger of Tennessee, both Republicans, seeks to establish a new type of savings account. These accounts would combine the tax advantages of Roth IRAs with the accessibility of regular savings accounts.

Key features of the Universal Savings Account proposal

If passed, the USA Act would allow individuals to contribute up to $10,000 annually into a Universal Savings Account. Unlike traditional retirement accounts, these funds could be withdrawn at any time, for any reason, without taxes or penalties. Contributions would be made with post-tax dollars—similar to Roth IRAs—but unlike Roth IRAs, there would be no income limits or usage restrictions, and no penalties for early withdrawals. The proposal addresses concerns that the current U.S. savings system is overly complicated and discourages personal saving. “A simple and accessible savings plan will provide families with a way to establish financial security and prosperity,” said Senator Cruz. Representative Harshbarger called the bill a “commonsense” reform that cuts through bureaucracy and gives Americans more financial freedom.

How it works

  • Annual Contribution Limit: $10,000 (adjusted annually by $500 until it caps at $25,000)
  • Eligibility: No income-based restrictions
  • Withdrawals: Tax-free and penalty-free, for any purpose
  • Tax Benefits: Contributions are made after taxes, but growth and withdrawals are tax-free

The core idea behind the USA is to avoid “double taxation” on savings. Supporters argue that income is already taxed once when earned, and shouldn’t be taxed again when saved or invested.

How does it compare?

While Roth IRAs also allow for post-tax contributions and tax-free growth, they come with more restrictions—such as income limits and early withdrawal penalties. The USA account would offer more flexibility, a higher contribution limit (compared to Roth IRA’s $7,000 cap in 2025), and fewer bureaucratic hurdles. The USA Act has been introduced in both the House and Senate and referred to the House Ways and Means Committee and the Senate Finance Committee. If it gains traction, it could mark a major shift in how Americans are encouraged to save.