Sponsors (13)
The bill raises and inflation‑indexes the home‑sale capital gains exclusion to reduce tax bills for many homeowners—especially middle‑class sellers and seniors—while reducing federal revenue, skewing benefits toward sellers over non‑owners, and creating some administrative transition complexity.
Homeowners who sell a primary residence can exclude up to $500,000 (joint) / $1,000,000 (married filing separately?) of capital gain from taxable income, lowering their federal tax bills on qualifying sales.
Middle‑class families and seniors who sell long‑owned homes will shield more home‑sale gain from tax, providing particular relief to people relying on home equity for retirement or relocation.
Homeowners and taxpayers will benefit from indexing the exclusion for inflation, which preserves the exclusion's real value as home prices and prices generally rise.
Taxpayers/federal budget will receive reduced revenue because larger exclusions shrink taxable gain, which could modestly increase deficits or crowd out funding for other programs.
Homeowners with large home‑price appreciation—often wealthier sellers—will disproportionately benefit compared with renters and first‑time buyers, potentially worsening distributional equity.
Taxpayers and the IRS may face transition and compliance complexity because the higher exclusion only applies to sales after enactment, delaying benefits for prior sales and requiring updated administration.
Based on analysis of 2 sections of legislative text.
Doubles the primary-residence gain exclusion to $500,000/$1,000,000 and indexes those amounts for inflation for tax years after 2025; applies to sales after enactment.
Increases the tax exclusion for gain on the sale of a primary residence from the current $250,000/$500,000 limits to $500,000/$1,000,000 and makes those new limits subject to annual inflation adjustment. The change applies for taxable years beginning after 2025 and to sales and exchanges after enactment. It does not create new programs or funding and leaves other rules for the exclusion unchanged.
Introduced December 3, 2025 by John Cornyn · Last progress December 3, 2025