Capital Gains Inflation Relief Act of 2025

Key Points

• This bill would adjust the cost basis of certain assets for inflation before calculating capital gains taxes. Instead of paying taxes on the full difference between the purchase and sale price, individual taxpayers would only owe taxes on gains that exceed inflation, as measured by the GDP deflator.
• The inflation adjustment covers stocks in U.S. and certain foreign companies, cryptocurrency and other digital assets recorded on a blockchain, and tangible property like real estate. Each of these must be a capital asset or business-use property to qualify.
• The new rules would only apply to assets purchased after December 31, 2025, and held for more than three years. Taxpayers must also keep written records of their original purchase price to claim the inflation adjustment.
• Corporations are excluded from using this benefit, meaning it is targeted at individual investors, partnerships, S corporations, and investment funds like mutual funds and REITs. Special rules ensure the benefit passes through to individual partners and shareholders rather than being captured at the entity level.
• Digital assets are specifically defined to include natively electronic assets on a cryptographically secured distributed ledger that confer economic or access rights, bringing cryptocurrency squarely into the inflation-indexing framework.