Assets for Independence Act

Assets for Independence Act - Provides for the establishment of demonstration projects designed to determine: (1) the social, civic, psychological, and economic effects of providing to individuals and families with limited means an incentive to accumulate assets; (2) the extent to which an asset-based welfare policy that promotes saving for education, homeownership, and microenterprises may be used to enable individuals and families with low income to achieve economic self-sufficiency; and (3) the extent to which an asset-based welfare policy improves the community in which participating individuals and families live.

Requires each qualified not-for-profit organization or State or local government agency receiving a grant to establish a Reserve Fund.

Makes an individual eligible for assistance under a demonstration project if such individual is a member of a household that meets certain income and net worth tests. Authorizes appropriations.

Amends the Internal Revenue Code to allow a deduction for contributions made to an individual development account by or on behalf of a qualified individual to pay qualified expenses of such individual. Limits such contributions to $2,000 per year. Defines qualified expenses as those for: (1) postsecondary educational expenses; (2) a first-home purchase; and (3) business capitalization. Excludes distributions from such an account for such purposes from gross income. Makes such accounts exempt from tax, except the tax on unrelated business income of charitable, etc. organizations. Disregards funds in an individual development account of a demonstration project participant for purposes of all means-tested Federal programs.