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Congress·In Committee·about 2 months ago

Representative Fitzgerald Proposes Ending All Federal Taxes on Profits from Selling a Primary Home

Also known as: Middle Class Home Tax Elimination Act

Legislative Progress

✓ Filed
Review
House
Senate
President

Impacts

Positive Impacts(2)
Homeowner
Helps

This bill would eliminate the cap on how much profit from selling your primary home is tax-free. Right now, single homeowners can exclude up to $250,000 in profit and married couples up to $500,000. If this passes, there would be no limit at all — meaning someone who sells their home for $1 million or more in profit would owe zero federal taxes on that gain. This is especially helpful for long-time homeowners in areas where home values have skyrocketed.

Retiree
Helps

Many retirees have lived in their homes for decades and seen huge increases in property value. Under current law, selling a home with more than $250,000 (or $500,000 for couples) in profit means paying capital gains taxes on the amount above those limits. This bill would let retirees downsize or move to a more affordable area without worrying about a big tax bill eating into their home sale profits.

Key Points

  • This bill would change tax laws so homeowners no longer have to pay federal taxes on the profit they make when selling their main home. Currently, there are limits on how much profit you can keep tax-free, but this plan removes those limits entirely.
  • Under current rules, single people can keep up to $250,000 in profit and married couples can keep up to $500,000 without paying federal capital gains taxes. If this bill passes, a homeowner could sell their house for any amount of profit and owe $0 in federal taxes on that gain.
  • The proposal aims to help people who have lived in their homes for a long time and seen the value of their property increase significantly. It is designed to make it easier for families to move or downsize without facing a large tax bill from the IRS.
  • This change would only apply to a person's 'principal residence,' which is the home where they actually live. It would not apply to profits made from selling vacation homes, investment properties, or rental units.
  • If passed by Congress, these new rules would take effect for any home sales that happen after the date the bill officially becomes law.
TaxesHousing

Milestones

2 milestones2 actions
Jan 16, 2026House

Referred to the House Committee on Ways and Means.

Jan 16, 2026

Introduced in House

Related News

2 articles
Realtor.com·about 1 month ago

Lawmakers Push for Capital Gains Tax Exclusion

Bipartisan interest is growing for updating capital gains tax rules on home sales. While some bills seek to double the exclusion, others like the 'Middle Class Home Tax Elimination Act' aim to remove the caps entirely to encourage long-term homeowners to sell without facing massive tax bills.

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NerdWallet·2 months ago

Capital Gains Tax on Home Sales: How Taxes on Real Estate Work in 2026

As of early 2026, homeowners can generally exclude up to $250,000 or $500,000 of profit from taxes, but new legislative proposals are currently under consideration in Congress that could eliminate these dollar limitations entirely for primary residences.

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Source Information

Document Type

Congressional Bill

Official Title

Middle Class Home Tax Elimination Act

Bill NumberHR 7131
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

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