Nearly 13 million homeowners would owe capital-gains tax if they sold their primary residence today, NAR estimates, because the $250,000 and $500,000 exclusion limits written into the tax code in 1997 have never been adjusted for inflation. National Economic Council Director Kevin Hassett told Fox Business this month that the White House may propose new tax relief for home sellers before the midterms, and former council director Larry Kudlow said President Trump is “very interested” in exempting home sales under $2 million entirely. Neither official can rewrite that exclusion alone; only Congress can, and a bipartisan bill to double it has sat in a House committee since February 2025.
A Fox Business Comment, Not a Treasury Proposal
The idea surfaced during a Fox Business interview, not a policy rollout. Kudlow told the network he had discussed with Trump the possibility of indexing capital gains to inflation and separately exempting home sales worth $2 million or less from capital-gains tax altogether, and that the president was “very interested” in both ideas. Hassett added that the administration may unveil new tax breaks ahead of the midterm elections, without naming a mechanism, a timeline, or a dollar figure. Neither official described draft legislation, a Treasury rule, or an executive order; both described conversations.
Asked to confirm the reporting, White House spokesman Kush Desai told CNBC that “President Trump is always exploring new ideas to Make America Wealthy Again, but any policy announcements will come from the Administration directly.” That statement confirms discussion, not commitment. It also underscores a structural limit the interview did not mention: the home-sale exclusion lives in the Internal Revenue Code, not in agency discretion. Section 121 of Title 26, enacted by the Taxpayer Relief Act of 1997, sets the $250,000 and $500,000 figures directly in statute, which means changing either number requires an act of Congress rather than a regulatory memo or a presidential directive.
That distinction separates this story from tariff policy or agency rulemaking, where the executive branch can move unilaterally. A capital-gains exclusion tied to a specific dollar figure in the tax code is Congress’s to write, amend, or leave alone, and nothing filed this year gives the White House a vehicle to do it independently of the House and Senate.
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The Exclusion Frozen Since a $129,000 Median Home
When Congress set the $250,000 and $500,000 thresholds in 1997, the national median home price was roughly $129,000, according to NAR’s own accounting of the provision’s history. The exclusion applies once a seller has owned and lived in the home for at least two of the five years before the sale, and it has never carried an inflation adjustment, unlike tax brackets, the standard deduction, or annual retirement-contribution limits, all of which move most years. Roughly one in three homeowners, about 29 million households, now hold more equity in their primary residence than the single-filer exclusion would shield from tax if they sold.
The practical effect concentrates on people who have owned longest, which usually means older sellers. NAR president Kevin Brown testified to a congressional panel in June that “just like people were locked into their homes at lower interest rates, seniors are often locked in because of the home equity penalty,” arguing that homeowners sitting on decades of appreciation delay listing rather than trigger a tax bill they can plan around only by not selling at all.
That dynamic is why the exclusion has become a housing-supply argument as much as a tax argument. Every year that home values rise while the $250,000 and $500,000 figures stay fixed, a larger share of long-tenured sellers crosses the threshold, and the incentive to keep an unsold home off the market grows with it.
The Bill Sitting in Ways and Means Since February 2025
The actual legislative vehicle for the change is the More Homes on the Market Act, introduced by Rep. Jimmy Panetta, D-Calif., in February 2025 and referred to the House Ways and Means Committee, where it has not received a floor vote. A companion Senate bill carries the same core idea. Both versions would double the exclusion to $500,000 for single filers and $1 million for joint filers and index both figures to inflation going forward, which would prevent the freeze that produced today’s mismatch from recurring. By mid-August 2026 the House bill had drawn more than 150 cosponsors and the Senate version roughly two dozen, spanning both parties, with additional lawmakers signing on as recently as the chambers’ return from the August recess.
Cost is the obstacle that bipartisan support has not solved. A congressional budget analysis put the ten-year revenue loss from doubling the exclusion at $46.4 billion, and even a narrower version limited to sellers 55 and older was estimated at $4.9 billion. Panetta has acknowledged the price tag as the bill’s central hurdle in a Congress already negotiating other spending and tax priorities, which is why a measure with support from roughly a third of the House can still stall without a committee markup or a scored path to the floor.
Set against that record, the ideas Kudlow described are broader and carry no public cost estimate at all. Exempting every home sale under $2 million from capital-gains tax, rather than doubling a $250,000 or $500,000 exclusion, would shield far more profit per sale, and tax analysts who reviewed the reporting told CNBC the benefit would skew toward higher-value transactions and wealthier sellers rather than the middle-income long-tenured homeowners NAR’s data highlights.
The result is two separate proposals moving on different tracks with different arithmetic. Congress’s version has a bill number, a committee record, a revenue score, and a bipartisan coalition, but no scheduled vote. The White House’s version has a receptive president and no legislative text, no cost estimate, and no committee of jurisdiction that has taken it up. Only one of those paths runs through a body that can actually change the statute.
Until either moves further, the $250,000 and $500,000 figures set in 1997 remain the law, and a homeowner who exceeds them still owes tax on the sale regardless of what gets discussed on cable television. Whether that changes for the first time in nearly three decades depends less on what Trump is “very interested” in than on whether Ways and Means schedules a markup for a bill it has held since the winter of 2025.
This article was researched and drafted with the assistance of artificial intelligence.
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