A bill introduced in the House this summer would let homeowners 65 and older shield up to $1 million of home-sale profit from capital-gains tax, four times what the law allows today. The Nest Egg Protection Act, filed by Rep. Nicole Malliotakis of New York, targets a gap Congress has left untouched since 1997: the $250,000 single and $500,000 married exclusion thresholds have never moved even as home values climbed for nearly three decades. That mismatch is pushing a rising share of longtime homeowners into capital-gains bills large enough to make selling irrational, a pattern economists call the lock-in effect. The bill remains pending, with no committee vote yet scheduled.
What the Nest Egg Protection Act Would Actually Change
Malliotakis introduced the bill, formally H.R. 9064, on June 1, 2026, and it would apply only to individuals and married couples age 65 or older who have owned and lived in their home as a primary residence for at least 25 years. Qualifying sellers could exclude up to $1 million in home-sale gains from federal tax, roughly quadruple the exclusion available to everyone else under current law. Malliotakis represents New York’s 11th Congressional District, where she has cited a median home price above $700,000 as evidence that the exclusion has fallen far behind local markets.
The exclusion the bill would replace has stayed fixed since it was set by the Taxpayer Relief Act of 1997, which lets individual filers exclude $250,000 and joint filers exclude $500,000 of home-sale gains. Home prices have risen far faster than that ceiling in the nearly three decades since, so a threshold that once cushioned almost every seller now catches a growing number of long-tenured owners, particularly in coastal and high-appreciation metro markets where price gains have compounded the longest.
The relief would not be permanent. Based on the bill’s text, the enhanced $1 million exclusion would apply only to tax years 2027 through 2030 if the measure is approved and signed into law, then expire absent further congressional action. That four-year window suggests the proposal is meant as a temporary incentive to unlock housing inventory rather than a permanent rewrite of the capital-gains code, a distinction that will likely shape how its revenue cost gets scored in committee.
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Why a Decades-Old “Lock-In Effect” Brought Congress Back to This Threshold
Housing economists have a name for what happens when a fixed tax threshold collides with rising prices: the lock-in effect, in which owners delay selling to avoid a tax bill they would not have owed years earlier. Malliotakis has framed the bill in those terms, arguing that seniors who paid off a mortgage decades ago and built substantial equity are effectively penalized for moving, whether the goal is downsizing, relocating near family, or transitioning into assisted living, especially now that today’s elevated mortgage rates already make trading a paid-off house for a smaller one more expensive than it looks on paper.
The scale of the problem has grown quickly. Roughly 8 percent of home sales now generate capital gains that exceed the current exclusion threshold, more than double the share from five years earlier, according to data from the real-estate analytics firm CoreLogic cited in reporting on the bill. Separate research from the Yale Budget Lab found that between 10 and 15 percent of homeowners hold unrealized gains above the exemption limits, with those sellers’ homes averaging about $1.4 million and gains exceeding the exclusion by roughly $430,000, a profile skewed toward older, higher-net-worth households.
That last detail is also the bill’s central criticism. Because the households most likely to exceed today’s exclusion already own higher-value homes, expanding the exclusion to $1 million would concentrate its benefit among longtime owners in expensive markets rather than the broader population of older Americans, tax analysts have argued. Supporters counter that freeing even a slice of that inventory, particularly larger homes vacated by downsizing retirees, could ease pressure in tight local markets where younger, first-time buyers are competing for the same limited supply.
The Bill’s Path Through Ways and Means, and What Still Isn’t Settled
The Nest Egg Protection Act has been referred to the House Ways and Means Committee, the panel with jurisdiction over the tax code, and it has not yet received a hearing or committee vote. Malliotakis is also a cosponsor of a related but separate bill, the More Homes on the Market Act, which would permanently double the standard exclusion to $500,000 for individuals and $1 million for married couples, with future increases tied to inflation, rather than reserving the higher figure for sellers 65 and older.
The bill fits a broader pattern in Malliotakis’s tax agenda for older filers. She was a chief advocate for raising the SALT deduction cap to $40,000 and wrote the senior bonus deduction included in the Working Families Tax Cuts, which gives qualifying filers 65 and older up to $6,000 in additional deductions for individuals and $12,000 for married couples. The Nest Egg Protection Act would extend that focus from ordinary income and property taxes to capital gains, a third lever in the federal tax code that shapes how much of a retiree’s income and home equity the IRS ultimately claims.
The two proposals reflect different bets about how to loosen the housing market: one raises the ceiling for every seller with automatic inflation adjustments built in, the other targets a narrower, older population for a fixed four-year window tied to a specific age and ownership tenure. Which approach, if either, advances will depend on how the Ways and Means Committee weighs the revenue cost against the political appeal of a benefit aimed squarely at retirees, a group that has featured prominently in the local endorsements Malliotakis has rolled out since introducing the bill.
Neither bill has a hearing date, and Congress has let comparable capital-gains relief proposals stall in prior sessions even when they drew bipartisan sympathy. For a senior weighing whether to sell a long-held home, the practical reality has not changed: the exclusion remains $250,000 for single filers and $500,000 for joint filers, and any relief tied to the Nest Egg Protection Act would not take effect, if it takes effect at all, before the 2027 tax year its sponsor has targeted.
This article was produced with AI assistance and reviewed against primary sources by The Money Overview editorial team.
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