Capital Gains Inflation Relief Act of 2025

Summary

Creates an inflation-adjusted cost basis rule for certain long-held assets owned by non-corporate taxpayers. For qualifying assets held more than three years, the bill replaces the usual adjusted basis with an "indexed basis" that increases basis by an inflation factor tied to the GDP implicit price deflator, reducing reported taxable gains on sale. It covers common stock (including some foreign stock), specified digital assets on cryptographically secured ledgers, and tangible property, includes detailed rules for partnerships, S corporations, RICs/REITs and related-party transfers, and applies to assets acquired after December 31, 2025.

• Introduces an "indexed basis" that raises cost basis by inflation for certain assets held over 3 years, reducing taxable gains.
• Applies to non-corporate taxpayers holding C-corp common stock, certain foreign stock, qualifying digital assets on cryptographically secured ledgers, and tangible property.
• Uses the GDP implicit price deflator (latest Commerce revision) to calculate the inflation adjustment.
• Contains extensive pass-through and entity rules for partnerships, S corps, RICs, REITs, and common trust funds.
• Requires written documentation of original purchase price and suspends indexing when risk of loss is substantially reduced (e.g., short positions).
• Includes anti-abuse provisions allowing Treasury to disallow indexing for transfers meant to secure or increase indexing benefits.
• Small improvements under $1,000 get streamlined treatment; improvements ≥ $1,000 may be treated as separate indexed assets.
• Does not apply to corporate taxpayers and excludes certain entity-level tax and qualification computations from indexing.
• Applies to assets acquired after Dec 31, 2025, for taxable years ending after that date.