Biden Proposes New Homebuyer Tax Credits
President Biden is calling for new middle-class tax breaks, including a mortgage tax credit.


Promoting a fairer U.S. tax code is a theme in President Biden’s FY25 budget and State of the Union address delivered early this year before a joint session of Congress. In addition to proposals to increase the corporate minimum tax rate for corporations, increase taxes on billionaires, and focus on Medicare and Social Security, Biden is calling for new tax credits to effectively lower mortgage rates and make home ownership more affordable.
“For many Americans, owning a home is the cornerstone of raising a family, building wealth, and joining the middle class. Too many working families feel locked out of homeownership and are unable to compete with investors for a limited supply of affordable for-sale homes,” the White House stated in a release.
Here’s more of what you need to know about Biden's proposals for homebuyers.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Biden homebuyer $400 tax credit
In his State of the Union (SOTU) address in March and the administration's FY25 budget, President Biden proposed a series of initiatives to provide relief and assistance to potential homebuyers, particularly those in the middle-class and first-generation homeowners. If eventually passed by Congress, these initiatives could impact the housing market and help some families achieve their dream of homeownership.
“I want to provide an annual tax credit that will give Americans $400 a month for the next two years as mortgage rates come down to put toward their mortgage when they buy a first home or trade up for a little more space,” Biden said.
One of the key proposals is the Mortgage Relief Credit. This credit would target middle-class first-time homebuyers.
- Under this plan, according to the White House, eligible buyers could receive an annual tax credit of $5,000 for two years.
- The credit would reduce the mortgage rate on the median home by more than 1.5 percentage points for two years.
- The Biden administration estimates that over 3.5 million middle-class families could benefit from the credit if passed.
Additionally, President Biden is proposing incentives to encourage current homeowners to sell their starter homes. The administration notes that homeowners are sometimes reluctant to sell due to the low mortgage rates they may have, even if their current homes no longer suit their needs.
- Biden called on Congress to provide a one-year tax credit of up to $10,000 to middle-class families who sell their starter homes to another owner-occupant.
- The administration says nearly 3 million families could benefit from this initiative.
Biden first time homebuyer assistance
Biden has also proposed providing down payment assistance for first-generation homebuyers and families that haven’t benefited from the generational wealth associated with homeownership.
- The proposed assistance could provide up to $25,000 in down payment support to eligible buyers, which the Biden administration says could help 400,000 families purchase their first home and break into the housing market.
During the SOTU address, the President also advocated for getting rid of “junk fees,” saying, “My administration is also eliminating title insurance fees for federally backed mortgages. When you refinance your home, this can save you $1,000 or more.”
Biden tax credit proposals: Bottom line
These proposed measures could make homeownership more attainable for some middle-class families and first-generation homebuyers. However, given the upcoming election and deep divides in Congress, whether these or other Biden tax proposals eventually gain traction and become law remains to be seen.
In the meantime, eligible homeowners and homebuyers can take advantage of some federal tax credits and deductions. These include options such as using retirement account funds for a downpayment, the mortgage interest deduction, deductions for mortgage points and property taxes, the capital gains tax exclusion for a primary home, and tax credits for energy-efficient home improvements.
Some states also offer incentives and programs for first-time homebuyers. Check with your state’s housing department for information.
Related
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

As the senior tax editor at Kiplinger.com, Kelley R. Taylor simplifies federal and state tax information, news, and developments to help empower readers. Kelley has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.
-
Stock Market Today: Stocks Stable as Inflation, Tariff Fears Ebb
Constructive trade war talks and improving consumer expectations are a healthy combination for financial markets.
-
What Trump’s 'Big Beautiful Bill' Means for Your Utility Bills
If passed, the 'Big Beautiful Bill' could make home energy upgrades more expensive and raise monthly costs. Here's how much more you might pay and how to prepare.
-
Homeschoolers Could Soon Save on Expenses With 529 Plans
Savings Accounts A new House GOP bill could change how you save for your child's homeschool education. Find out how.
-
Ohio Announces Two-Week Sales Tax Holiday Amid Tariffs, High Prices
State Tax Ohioans won't want to miss out on savings as pressure from tariffs spikes prices.
-
Five ‘Big Beautiful Bill’ Tax Changes to Watch in the Senate
Tax Policy The House passed its version of Trump’s "One Big, Beautiful Bill." Here’s what to look for as Senate Republicans take up the mega legislation.
-
New GOP Car Loan Tax Deduction: Which Vehicles and Buyers Qualify
Tax Breaks To fulfill Trump's campaign promise, House GOP lawmakers want to offer a tax deduction for car loan interest. How would it work?
-
Are Clean Energy Tax Credits a Thing of the Past?
Tax Credits Now that the House GOP mega bill has passed, some wonder whether energy-efficient incentives like solar, electric vehicle, and home improvement tax credits could go away.
-
Big GOP Tax Bill Could Change Your Estate Planning for 2025
Tax Law The GOP might extend and increase the higher estate and gift tax exemption and AMT thresholds. What might this mean for your estate plan?
-
New 'No Tax on Tips' Bill Approved: What to Know Now
Income Taxes Will you stop paying taxes on your tip income this year?
-
Millions Could Lose SNAP Food Benefits Under Trump Tax Cut Plan
Tax Policy The House Agriculture Committee approved nearly $300 billion in cuts to SNAP benefits, putting many at risk of hunger.