Capital gains taxes, the tax on profit from selling an asset like a home, have become one of the biggest financial hurdles for today’s homeowners. With home prices climbing so sharply over the past two decades, more sellers are finding themselves pushed past the IRS exemption limits and facing unexpected tax bills when they sell. A new proposal in Congress aims to change that.

On January 13, Representative Craig Goldman (R-TX) introduced the “Don’t Tax the American Dream Act,” a bill that would eliminate capital gains taxes for many homeowners who sell their primary residence. Under current law, individuals can exclude up to $250,000 in profit from capital gains taxes, while married couples can exclude $500,000, as long as they have lived in the home for at least two of the past five years. Goldman’s bill would remove those caps entirely, making qualifying homeowners fully exempt from capital gains taxes when they sell.

Goldman argues that the current limits are outdated and no longer reflect today’s housing market. The exemption amounts have not been updated since 1997, even though home prices have more than tripled since then. Realtor.com reports that U.S. home values have risen more than 260% over that period. As a result, about 34% of homeowners now exceed the single-filer exclusion, and by 2030 that number could grow to more than half of all homeowners, creating a strong financial incentive for people to stay put rather than move.

Support for reform is building across party lines. In February 2025, Representative Jimmy Panetta (D-CA) introduced a bill that would double the capital gains exclusions and then adjust them for inflation. In July, Representative Marjorie Taylor-Greene (R-GA) proposed eliminating capital gains taxes on home sales altogether. President Donald Trump also weighed in, saying the administration was considering removing capital gains taxes on homes.

The National Association of Realtors believes reducing capital gains taxes would increase housing supply by making it easier for homeowners to sell without being penalized. More homes on the market would be beneficial to both buyers and sellers.