Explained: Donald Trump Considers to Scrap Capital Gains Tax, What It Means for You?

Donald Trump says he’s open to eliminating capital gains tax. But who benefits most, and what happens to federal revenue? Here’s what’s unfolding.

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Trump Signals Capital Gains Tax Scrapping

US President Donald Trump has kickstarted debate after publicly endorsing the idea of scrapping capital gains tax on primary home sales. The move comes on the heels of a bill introduced by Georgia Representative Marjorie Taylor Greene, who argues the tax is outdated and punishes middle-class families trying to sell homes in today’s inflated market.

Speaking to reporters after the FIFA Club World Cup final, Trump said his administration is “looking at” Greene’s proposal. “It could be a very big positive,” he said. “It’s going to be a great incentive for a lot of people who really need money.”

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What’s the Capital Gains Tax on Primary Residences?

The IRS currently levies capital gains taxes on profits made from selling a home, unless those profits fall within certain thresholds: $250,000 for individual filers and $500,000 for joint filers. These exclusions apply only if the homeowner has lived in the house for at least two of the past five years.

However, these exemption limits haven’t changed since 1997, even as home prices have skyrocketed. For context, the median home price in 1997 was about $145,800. As of the first quarter of 2025, it stands at nearly $417,000, per Federal Reserve data.

As a result, a growing number of middle-class sellers are now breaching the exemption thresholds and facing tax liabilities once reserved for wealthier homeowners.

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What Does Greene’s Bill Propose?

The "No Tax on Home Sales Act," introduced by Greene, seeks to eliminate capital gains taxes on the sale of primary residences altogether. Her pitch is that it’s a way to ease pressure on everyday Americans and free up the housing industry in an already tight market.

She argues that the outdated cap has failed to keep pace with market realities and now affects far more households than originally intended. According to Realtor.com data, a staggering 79% of homeowners in Hawaii, 65% in Washington, and 62% in Massachusetts currently face the prospect of capital gains taxes when selling their homes.

Removing the tax entirely, Greene claims, would allow people to “downsize or relocate without being penalized for appreciation.”

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Who Would This Help?

While the proposal is positioned as middle-class relief, critics argue the real beneficiaries are likely to be high-income households who’ve gained the most from house price surges. Eliminating the capital gains tax would likely result in billions in lost federal revenue and could create loopholes that investors exploit to avoid taxes by claiming properties as “primary residences.”

Trump has voiced his support but, as President, cannot unilaterally make the change. That power rests with Congress, where the bill now sits with the House Committee on Ways and Means. Still, Trump’s public endorsement could pressure fellow Republicans to get behind the proposal.

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What Happens Now?

There is currently no set timeline for debate or a vote in Congress. While Trump has leaned into support for Greene’s bill, Democrats are expected to oppose it, citing revenue loss and concerns over tax equity. The debate is likely to heat up in the coming weeks as the 2025 economic agenda unfolds and tax policy becomes a key election issue.