President Trump’s administration is weighing capital gains tax cuts on home sales ahead of the midterm elections, with proposals that would expand exemptions and index gains for inflation, according to top economic officials.
National Economic Council Director Kevin Hassett said on Fox Business on Tuesday that Trump wants to offer voters fresh incentives to back Republicans in November. Hassett and Larry Kudlow, who led the council during Trump’s first term, discussed two key ideas: indexing capital gains to inflation and raising the exemption on home sale profits, with Kudlow noting that Trump is “very interested” in the proposals.
One proposal would exempt homes worth $2 million or less from capital gains taxes, Kudlow suggested. Another would allow capital gains to be adjusted for inflation so taxes apply only to real gains after inflation is factored in. Under current law, homeowners selling a primary residence can exclude up to $250,000 in profits if they’re single or $500,000 if married filing jointly, thresholds unchanged since 1997.
The push reflects broader momentum on the issue. Earlier this year, Senators Ted Cruz and Tim Scott asked Treasury Secretary Scott Bessent to reduce capital gains taxes by indexing a home’s basis with inflation. The bipartisan “More Homes on the Market Act” from early 2025 would double exemptions and adjust them annually for inflation, while the “No Tax on Home Sales Act” would eliminate capital gains taxes entirely on primary residence sales. Both bills remain in committee.
Any tax changes before the November elections face steep odds. “Changes to the tax law ahead of the midterm elections are extremely unlikely, given the tight time frame,” said certified financial planner Jude Boudreaux, citing difficulty passing legislation recently. A White House spokesman told CNBC that “any policy announcements will come from the Administration directly,” without confirming the proposals are being actively pursued.
Expanding the exemption would primarily benefit wealthier homeowners. In 2022, just around 10% of homeowners had gains exceeding the current exemption, and those homeowners had an average net worth of roughly $5.7 million, according to The Budget Lab at Yale. However, the exemption thresholds haven’t changed in nearly three decades as home values have soared, so some experts argue raising the cap reflects inflation’s impact rather than a windfall for the wealthy.
Sources
- Bloomberg — Trump’s consideration of capital gains tax cuts and home-sale exemptions as midterm strategy, with comments from Kevin Hassett
- CNBC — Details on Trump officials’ proposals, current exemption levels, expert analysis on likelihood and beneficiaries
- AdvisorHub — Specific proposal for exemptions on homes worth $2 million or less
- The Budget Lab at Yale — Data on homeowners exceeding current exemption and their average net worth
