Sponsors
The bill gives large tax relief to sellers of appreciated primary residences (especially owners of very expensive homes) by removing dollar caps, at the cost of reduced federal revenue, a concentration of benefits among wealthier taxpayers, and added administrative and enforcement challenges.
Homeowners selling their primary residence: can exclude unlimited capital gain from federal income tax (removes the $250k/$500k caps), reducing or eliminating tax owed on large appreciated homes.
Married couples and surviving spouses who sell a primary residence: face no special joint‑return numeric limits, simplifying tax outcomes and reducing couple‑specific complexity for family sellers with large gains.
Taxpayers broadly: the bill keeps the 2‑year ownership/use test and nonqualified‑use allocation, preserving some anti‑abuse and fairness limits on who can claim the exclusion.
Federal taxpayers generally: eliminating the dollar limits would likely substantially reduce federal income tax receipts, potentially increasing deficits or forcing cuts/offsets to other programs.
Higher‑income homeowners: the change shifts a large portion of tax relief to owners of very expensive primary residences, concentrating benefits among wealthier individuals.
IRS and taxpayers involved in high‑value home sales: removing caps may create incentives to recharacterize transactions as principal‑residence sales and increase audit, planning, and enforcement costs for the IRS.
Based on analysis of 2 sections of legislative text.
Removes the $250,000/$500,000 dollar caps on the tax exclusion for gain from selling a principal residence while keeping the two‑year ownership/use rule.
Introduced January 16, 2026 by Scott Fitzgerald · Last progress January 16, 2026
Removes the $250,000/$500,000 dollar caps on the federal tax exclusion for gain from the sale of a primary home, while keeping the existing two‑year ownership/use rule. The change applies to sales and exchanges after the law takes effect and also adjusts related cross‑references and joint/surviving‑spouse wording in the tax code.