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Congress·In Committee·about 2 months ago

Congress Moves to Remove the Cap on Tax-Free Profit When You Sell Your Primary Home

Legislative Progress

✓ Filed
Review
House
Senate
President

Impacts

Mixed Impacts(2)
Housing Assistance
Neutral
Renter
Neutral
Positive Impacts(2)
Homeowner
Helps
Retiree
Helps

Key Points

  • Congress would remove the current dollar cap on how much profit from selling your main home can be tax-free.
  • This would mainly help homeowners in high-cost areas or people who sell after big price increases, because larger profits could be excluded from taxes.
  • If you sell a home for a gain after the law takes effect, more (or possibly all) of that gain could avoid federal income tax, depending on the other rules that still apply.
  • This could reduce federal tax revenue and shift who benefits most toward higher-income homeowners with bigger home-price gains.
  • The change would apply only to home sales happening after the bill is enacted; it would not automatically change taxes for past sales.
TaxesHousing

Milestones

2 milestones2 actions
Jan 13, 2026House

Referred to the House Committee on Ways and Means.

Jan 13, 2026

Introduced in House

What Happens Next

Projected impacts based on AI analysis

Right after enactment; it depends on when Congress passes it and it is signed into law.

New rule applies to home sales that happen after the bill becomes law (if enacted).

If you close on the sale of your primary home after the enactment date, you may be able to exclude more (or all) of your profit from federal taxes compared with today’s cap.

Next tax filing season after enactment.

Tax software and accountants update guidance for the first tax season after enactment (if enacted).

When you file taxes for the year you sold your home, reporting may be simpler for high-gain sales because the dollar cap would no longer limit the exclusion.

Source Information

Document Type

Congressional Bill

Official Title

To amend the Internal Revenue Code of 1986 to eliminate the dollar limitations on the exclusion of gain from sales of principal residences, and for other purposes.

Bill NumberHR 7034
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

Cosponsors

(3)
R: 3

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.