Sponsors (6)
The bill expands and indexes the home-sale capital-gains exclusion to give meaningful tax relief to home sellers, particularly wealthier homeowners, at the cost of reduced federal revenue and a potential hit to tax progressivity.
Homeowners who sell their primary residence can exclude up to $500,000 (or up to $1,000,000 in specified cases) of capital gain from taxable income, lowering taxes owed on qualifying home sales.
Homeowners and future home sellers benefit from indexing the exclusion for inflation, preserving the exclusion's real value over time so future sellers do not lose purchasing power due to inflation.
Taxpayers broadly face reduced federal revenue because larger exclusions lower taxable income, which could increase deficits or reduce funding available for federal programs and services.
Middle- and higher-income homeowners gain most from the larger exclusion, concentrating benefits among wealthier households and potentially worsening tax progressivity.
Based on analysis of 2 sections of legislative text.
Raises the tax-free exclusion on gain from sale of a primary residence to $500,000 and $1,000,000 and indexes those amounts for inflation starting after 2025.
Introduced December 3, 2025 by John Cornyn · Last progress December 3, 2025
Increases the tax-free capital gain homeowners can exclude when they sell their main home by replacing the current exclusion amounts with $500,000 and $1,000,000 (and corresponding lower amounts where applicable). It also requires those exclusion amounts to be indexed for inflation beginning for taxable years after 2025. The change applies to sales and exchanges after enactment.