Option 39:

Create Universal Savings Accounts

Topline Estimates

Gross Domestic Product (GDP)
+<0.05%
Gross National Product (GNP)
-<0.05%
Full-Time Equivalent Jobs
+8K
Wage Rate
+<0.05%
Capital Stock
+<0.05%
Conventional Primary Deficit Change (10‑Yr)
+$161.8B
Dynamic Primary Deficit Change (10‑Yr)
+$159.9B
Dynamic Total Deficit Change (10‑Yr)
+$183.6B

Source: Tax Foundation General Equilibrium Model.

Current law provides at least 11 different types of tax-advantaged saving vehicles, each with a variety of rules and limitations: four main types of retirement saving provisions, four more for saving related to education and disabilities (including the One Big Beautiful Bill Act’s Trump Accounts), three more for saving related to health and dependent care, and one for saving related to emergencies. Other countries have found a simpler, more widely available solution to boost saving for taxpayers across income levels. Universal savings accounts (USAs) are tax-advantaged savings vehicles with unrestricted use of funds, allowing participants to save for a variety of reasons, including retirement, education, housing, health, unemployment, and emergencies.

This option establishes Roth-style universal savings accounts, permitting individuals to contribute $10,200 post-tax to a USA in 2027, indexed to inflation thereafter. Unused “contribution room” can be carried forward to the next year. Earnings on contributions grow tax-free. Withdrawals are allowed at any time for any reason without penalty or further taxation and are added back to contribution room. For example, if an individual withdraws $1,000, contribution room increases by $1,000.

USAs would reduce the tax burden on saving, especially for low-and middle-income taxpayers. Domestic saving would rise, and more of the returns to domestic investment would flow to Americans. However, the larger budget deficit would increase federal government borrowing, and more interest payments would flow to foreigners, resulting in a decline in GNP. USAs would also slightly decrease marginal tax rates on income, leading to a small expansion in economic output.

On a conventional basis, this option would increase the primary deficit by $161.8 billion over the budget window. Long-run GDP would rise slightly, while long-run GNP would fall slightly. Incorporating changes in interest costs, the publicly held debt-to-GDP ratio would be higher than baseline, reaching 178.5 percent by 2056.

On average, in 2036, taxpayers would see increases in their after-tax incomes of 0.1 percent, and that would rise on a long-run dynamic basis to an average increase of 0.3 percent.

Modeled Results

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About the Authors

Erica York Tax Foundation
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Erica York

Vice President of Federal Tax Policy

Erica York is Vice President of Federal Tax Policy with Tax Foundation’s Center for Federal Tax Policy. Her analysis has been featured in The Wall Street Journal, The Washington Post, Politico, and other national and international media outlets.

Garrett Watson Tax Foundation
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Garrett Watson

Director of Policy Analysis

Garrett Watson is Director of Policy Analysis at the Tax Foundation, where he conducts research on federal and state tax policy. His work has been featured in The Washington Post, The Atlantic, Politico, the Associated Press and other major outlets.

Huaqun Li Tax Foundation
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Huaqun Li

Senior Economist, Director of Modeling Projects

Dr. Huaqun Li is Senior Economist, Director of Modeling Projects at the Tax Foundation. She focuses on developing and maintaining the Foundation’s Taxes and Growth Model, which models the budgetary and economic effects of changes to federal tax policy.

William McBride or Will McBride Tax Foundation
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William McBride

Chief Economist & Stephen J. Entin Fellow in Economics

Dr. William McBride is the Chief Economist & Stephen J. Entin Fellow in Economics at the Tax Foundation, where he oversees major research projects primarily related to reforming the federal tax code, advancing sound tax policy, and improving the federal government’s fiscal outlook.

Alex Durante Tax Foundation
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Alex Durante

Senior Economist

Alex Durante is a Senior Economist at the Tax Foundation, working on federal tax policy and model development. Alex worked as a research assistant at the Federal Reserve Board and served as a staff economist on the Council of Economic Advisers.

Alex Muresianu Tax Foundation
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Alex Muresianu

Senior Policy Analyst

Alex Muresianu is a Senior Policy Analyst at the Tax Foundation, focused on federal tax policy. Previously working on the federal team as an intern in the summer of 2018 and as a research assistant in summer 2020. He attended Tufts University, graduating with a degree in economics and minors in finance and political science.

Peter Van Ness Tax Foundation

Peter Van Ness

Research Software Developer

Peter Van Ness is a Research Software Developer at the Tax Foundation working on federal tax policy and model development. Peter previously worked as a research assistant at another think tank and as a data analyst at a consulting firm.

Aleksei Shilov Tax Foundation Research Software Developer

Aleksei Shilov

Research Software Developer

Aleksei Shilov is a Research Software developer at the Tax Foundation working on economic model development and federal tax policy. Aleksei joined the Tax Foundation as an intern in January 2025. He holds a B.S. in computer science and a minor in economics from Northeastern University and is currently based in Boston, MA.

Daniel Bunn Tax Foundation President & CEO
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Daniel Bunn

President and CEO

Daniel Bunn is President and CEO of the Tax Foundation. Daniel has been with the organization since 2018 and, prior to becoming President, successfully built its Center for Global Tax Policy, expanding the Tax Foundation’s reach and impact around the world. Prior to joining the Tax Foundation, Daniel worked in the United States Senate at the Joint Economic Committee.