Trump Eyes Capital Gains Tax Cuts on Home Sales and Investments Ahead of Midterms

President Trump is shopping two tax ideas ahead of November, and neither one is close to becoming law.

National Economic Council Director Kevin Hassett and former NEC chief Larry Kudlow laid it out Tuesday on Fox Business. Kudlow, who ran the council during Trump's first term, said he'd personally pitched Trump on indexing capital gains to inflation and on a bigger exemption for home sale profits. Trump's reaction, according to Kudlow: "I spoke to him, he liked the idea of the indexing, he liked the idea of a bigger exemption."

Hassett didn't dress up the politics. "He wants to hit people with the things that are promises that we're going to do if the Republicans have power in the future," Hassett said, adding voters should "expect a lot more policy between now and the midterms."

What's actually on the table

Idea one: index capital gains to inflation. Right now, if you buy a stock for $100,000 and sell it years later for $200,000, you owe tax on the full $100,000 gain, even though a chunk of that increase is just the dollar losing value, not real profit. Indexing would strip out the inflation portion before calculating the tax bill.

Idea two: raise the tax exclusion on primary home sales, specifically for properties worth $2 million or less. Current law lets single filers exclude $250,000 in gains and married couples $500,000, thresholds that haven't moved since 1997. Home values have risen enormously since then, especially in expensive metro areas, pushing more ordinary long-term homeowners over the exemption line.

Neither one happens without Congress

Both ideas require legislation. Trump's first administration looked at doing capital gains indexing unilaterally through Treasury, without Congress, and dropped it. The legal snag: the tax code has long defined an asset's "cost" as the nominal price paid, and changing that reading has been treated as Congress's job, not Treasury's. Legal experts believe an executive-action route would likely draw court challenges.

On the legislative side, Republican Sens. Ted Cruz and Tim Scott already introduced an indexing bill this year. The Committee for a Responsible Federal Budget estimated it would cut federal revenue by roughly $200 billion. There's also a bipartisan bill, the More Homes on the Market Act, and a GOP bill from former Rep. Marjorie Taylor Greene to eliminate home-sale capital gains entirely. All of them are stuck in committee.

Jude Boudreaux, a certified financial planner in New Orleans, told CNBC that tax changes before the midterms are "extremely unlikely," given how hard it's been to pass anything recently.

The politics behind the timing

Trump's approval rating has slipped below 40% heading into the midterms, and the administration is looking for affordability wins. Republicans are bracing for a tough November, with voters souring on Trump's handling of the economy and the war in Iran.

Not everyone in the GOP is waiting to see what happens. Rep. Claudia Tenney, R-N.Y., a member of the Ways and Means Committee, told the Washington Reporter she backs the home-sale proposal outright, calling it a win for her constituents. The Reporter also cited an April poll for the American Property Owners Alliance claiming 82% of likely voters support indexing the home-sale exclusion to inflation, with majority support across party lines. That poll was commissioned by an industry-aligned group advocating for the policy, which is worth keeping in mind when weighing the number.

Who actually benefits

Len Burman, co-founder of the nonpartisan Tax Policy Center and a Syracuse University professor, told Newsweek both ideas are "terrible policy and politics" because the benefits would "disproportionately accrue to the wealthy." Renters, younger Americans without major assets, and homeowners already under the existing exemption thresholds wouldn't see a dime.

Kudlow pushed back on that framing on air, describing the home-sale beneficiaries as "empty nesters who own a house for 30 or 40 years" who "shouldn't have to pay the Biden inflation tax," not the ultra-wealthy.

Both things can be true. Long-time homeowners in expensive markets who bought decades ago genuinely do get hit by an exclusion frozen since 1997.