Sponsors (21)
The bill increases the home‑sale capital‑gain exclusion (and indexes it for inflation), giving substantial tax relief to many sellers while reducing federal revenue and skewing benefits toward existing homeowners, with some administrative transition complexity.
Homeowners (especially those selling long‑owned homes) can exclude up to $500,000/$1,000,000 of capital gain on a home sale, directly reducing taxable income and lowering federal tax bills for many sellers.
Indexing the exclusion for inflation preserves its real value over time, preventing erosion from rising home prices and inflation so future sellers maintain similar after‑tax outcomes.
The larger, inflation‑indexed exclusions will reduce federal taxable income and thus federal revenue, which could modestly increase deficits or require offsetting cuts/changes to other programs.
The change primarily benefits homeowners with substantial home‑price appreciation and may disproportionately favor wealthier sellers over renters and first‑time buyers, worsening distributional equity in housing tax policy.
Limiting the change to sales after enactment delays relief for past sales and may create transition and compliance complexity for taxpayers and the IRS.
Based on analysis of 2 sections of legislative text.
Doubles the exclusion of gain on sale of a primary residence to $500K (single)/$1M (joint) and indexes those amounts for inflation starting after 2025.
Official title: Amend the Internal Revenue Code of 1986 to increase the exclusion of gain from the sale of a principal residence, and for other purposes.
Introduced December 3, 2025 by John Cornyn · Last progress December 3, 2025
Increases the tax exclusion for gain on the sale of a primary home by doubling the current amounts and indexing them for inflation. For single filers the exclusion rises from $250,000 to $500,000 and for joint filers from $500,000 to $1,000,000, with the new amounts adjusted annually for inflation for taxable years beginning after 2025; the changes apply to sales and exchanges after enactment.