Sponsors (125)
The bill lets many homeowners exclude substantially more home-sale gain (with annual inflation adjustments), reducing taxes for sellers—particularly in high-cost areas—while lowering federal revenue and concentrating benefits toward owners of more expensive homes, with modest implementation costs for tax authorities.
Homeowners — especially middle-class families and sellers in high-cost areas — can exclude up to $500,000 (single) / $1,000,000 (joint) of gain on the sale of a principal residence, reducing or eliminating capital-gains tax when they sell.
Homeowners and taxpayers will get annual inflation adjustments to the exclusion, preserving its real value over time and preventing erosion by rising home prices.
A larger exclusion means more sellers — particularly those in expensive housing markets — are less likely to owe capital-gains tax on typical home-price appreciation.
Higher exclusion thresholds will reduce taxable income nationwide and are likely to lower federal revenue, potentially increasing the deficit unless offsets are provided.
The expanded exclusion will disproportionately benefit higher-income sellers and owners of expensive homes, weakening the progressivity of the tax code.
The IRS and financial institutions will face implementation and administrative costs to update rules and systems for the higher thresholds and COLA, creating transitional burdens.
Based on analysis of 2 sections of legislative text.
Raises the tax-free gain exclusion on sale of a primary residence (doubling $250K/$500K to $500K/$1M) and makes the amounts inflation-adjusted starting after 2024; applies to sales after enactment.
Introduced February 13, 2025 by James Varni Panetta · Last progress February 13, 2025
Raises the amounts of tax-free gain that an individual (or married couple filing jointly) can exclude on the sale of a primary residence and makes those dollar limits subject to annual inflation adjustments beginning after 2024. The change effectively doubles the basic exclusion amounts shown in current law and directs the IRS to adjust them for cost-of-living increases going forward; it applies to sales and exchanges occurring after the law is enacted.