WASHINGTON, D.C. — National Economic Council Director Kevin Hassett and Fox Business host Larry Kudlow discussed potential new tax breaks on capital gains for home sales in a television broadcast. The conversation covered proposals to index gains to inflation or expand exclusions ahead of the midterm elections.

Larry Kudlow stated that the White House may propose new tax breaks in the lead-up to the midterm elections. He said he spoke with President Donald Trump about indexing capital gains to inflation. Kudlow also said he spoke with President Donald Trump about making changes to capital gains taxes on home sales to shield more homeowner profits from taxes.

"These are not necessarily rich people. These are empty nesters who own a house for 30 or 40 [years], but they shouldn't have to pay the Biden inflation tax," Kudlow said. White House spokesman Kush Desai stated that any policy announcements will come from the Administration directly.

Under current law, sellers generally pay capital gains tax on the difference between a home's adjusted basis and its sales price. Homeowners selling a primary residence who meet certain IRS conditions can qualify for the Section 121 exclusion, which shields up to $250,000 of profits for single filers and $500,000 for married couples filing jointly. Home sale profits above the Section 121 exclusion threshold are subject to long-term capital gains taxes of 0%, 15% or 20%, depending on the seller's taxable income.

The $250,000 and $500,000 capital gains exclusion thresholds have not changed since 1997. A change to the home sale capital gains exclusion would require action from Congress. Sens. Ted Cruz and Tim Scott sent a letter to Treasury Secretary Scott Bessent earlier this year asking him to reduce capital gains taxes by indexing a home's basis with inflation.

The More Homes on the Market Act is a bipartisan, bicameral proposal from early 2025 that would double the capital gains exemptions for primary home sales profits and adjust those figures annually for inflation. The No Tax on Homes Sales Act was introduced by former Rep. Marjorie Taylor Greene in mid-2025 and would eliminate capital gains taxes on the sale of primary residences. The More Homes on the Market Act and the No Tax on Homes Sales Act remain in committee.

Roughly 29 million households have built up more equity than the federal capital gains tax exclusion for single filers ($250,000), according to a 2025 analysis by the National Association of Realtors. Homeowners with gains exceeding the current capital gains exemption in 2022 had an average net worth of roughly $5.7 million, according to The Budget Lab at Yale. The National Association of Realtors expects the number of households with equity exceeding the single filer exclusion to grow to 56% of homeowners by 2030.

Why It Matters

The discussion occurs as legislative efforts to alter capital gains rules for home sales remain stalled in committee. With the exclusion thresholds unchanged since 1997, the number of households exceeding the limits has grown. The National Association of Realtors projects that 56% of homeowners will have equity exceeding the single filer exclusion by 2030, a rise of 46 percentage points from the 10% recorded in 2022.

Proposals such as the More Homes on the Market Act and the No Tax on Homes Sales Act offer different approaches to addressing these static limits. While one seeks to double exemptions and index them to inflation, the other aims to eliminate the tax entirely for primary residences. The outcome of these legislative efforts and any potential executive action will determine the tax liability for millions of homeowners, particularly those who have held their properties for decades.

Timeline

The $250,000 and $500,000 capital gains exclusion thresholds have not changed since 1997. In 2022, homeowners with gains exceeding the current capital gains exemption had an average net worth of roughly $5.7 million, according to The Budget Lab at Yale.

The More Homes on the Market Act is a bipartisan, bicameral proposal from early 2025 that would double the capital gains exemptions for primary home sales profits and adjust those figures annually for inflation. The No Tax on Homes Sales Act was introduced by former Rep. Marjorie Taylor Greene in mid-2025 and would eliminate capital gains taxes on the sale of primary residences.

Roughly 29 million households have built up more equity than the federal capital gains tax exclusion for single filers ($250,000), according to a 2025 analysis by the National Association of Realtors.