HOPE Act of 2025

This bill amends the Internal Revenue Code to create HOPE Accounts, tax-exempt trusts for paying qualified medical expenses, and sets rules for contributions, distributions, employer contributions, and penalties. Sec. 2, HOPE Accounts: Establishes HOPE Accounts as tax-exempt trusts for paying qualified medical expenses of the account beneficiary, with rules on trustee requirements (e.g., bank or insurance company), contribution limits (monthly limits of $4,000 for self-only or married filing jointly, $8,000 for head of household with family coverage, adjusted for inflation after 2026), and eligibility (must have minimum essential coverage and no contributions to other health accounts like FSAs or HSAs). Distributions for qualified medical expenses are tax-free; non-qualified distributions are taxable with a 30% additional tax, except for death or disability. Excess contributions can be returned before the tax return due date. Rollovers between HOPE Accounts are allowed within 60 days. Employer contributions to HOPE Accounts are treated as employer-provided coverage, but only for employees with adjusted gross income under $100,000 ($200,000 joint). Employers must report contributions on Form W-2. Penalties apply for excess contributions (section 4973) and failure to make comparable employer contributions (section 4980G). HOPE Accounts are subject to prohibited transaction rules (section 4975). Trustees must report contributions and distributions to the IRS and account beneficiaries. The amendments apply to taxable years beginning after December 31, 2025.