More Homes on the Market Act

Bill Number: S. 3332
Origin Chamber: Senate
Congress: 119th Congress, Session 1
Policy Area: Taxation
Status: Introduced
Latest Action: 2025-12-03: Read twice and referred to the Committee on Finance.
Last Updated: 2026-06-25T12:18:24Z

AI-Generated Summary

Purpose

The "More Homes on the Market Act" aims to reduce the tax burden on homeowners selling their primary residence by doubling the amount of capital gains (profit from the sale) that can be excluded from federal income taxes. This is intended to encourage more home sales and increase housing market activity.

Key Provisions

Increased Exclusion Amounts:
For single filers or married individuals filing separately, the exclusion rises from $250,000 to $500,000.
For married couples filing jointly, the exclusion rises from $500,000 to $1,000,000.
Inflation Adjustment: Starting in tax years after 2025, the new $500,000 and $1,000,000 amounts will be adjusted annually for inflation using a cost-of-living formula (based on the Consumer Price Index, rounded to the nearest $100). The base year for this adjustment is 2024.
Eligibility Rules Unchanged: The bill does not alter existing requirements for the exclusion, such as owning and using the home as a principal residence for at least two of the five years before the sale.
Effective Date: Applies to home sales and exchanges after the bill's enactment.

Significant Changes to Existing Law

Under current law (Section 121 of the Internal Revenue Code), gains from selling a primary home are excluded up to $250,000 for singles and $500,000 for joint filers, with no automatic inflation adjustments.
This bill doubles those caps and introduces inflation indexing, marking the first such adjustment since the exclusion was set in 1997. It updates headings and references in the tax code to reflect the new amounts.

Potential Impacts

On Citizens: Homeowners, especially middle- and upper-middle-income sellers in high-cost areas, could save significantly on taxes (e.g., avoiding taxes on up to twice as much profit), potentially making it easier to sell and buy new homes. This might boost housing mobility but could widen wealth gaps if benefits skew toward higher-value property owners.
On Government Agencies: The Internal Revenue Service (IRS) will need to update forms, guidance, and systems to handle the higher exclusions and inflation calculations, with a potential short-term revenue loss for the federal government (estimated in billions over time, though not specified in the bill).
On International Relations: No direct impact, as this is a domestic tax policy change.

Main Stakeholders Affected

Homeowners and Taxpayers: Primary beneficiaries, particularly those selling homes with gains exceeding current limits.
Real Estate Industry: Agents, builders, and lenders may see increased transaction volume due to reduced tax deterrents.
Federal Government and IRS: Responsible for implementation and enforcement, facing administrative updates and reduced tax collections.
Low- and Moderate-Income Households: Potentially indirect effects, as they are less likely to hit the old caps but could benefit if market activity lowers home prices or improves affordability.

Notable Legal, Constitutional, or Political Implications

Legal: This is a straightforward tax code amendment with no challenges to constitutional principles like equal protection or due process. It maintains the existing framework for principal residence exclusions, avoiding broader tax reform debates.
Constitutional: Neutral; tax policy falls under Congress's broad authority to levy and regulate taxes (Article I, Section 8).
Political: Bipartisan support (introduced by senators from both parties) suggests appeal across the aisle, potentially as a targeted housing affordability measure amid rising home prices. It could influence future tax debates on indexing other deductions or addressing housing shortages, but critics might argue it favors wealthier homeowners over broader relief programs.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Cornyn, John [R-TX]

Cosponsors (20)

Sen. Bennet, Michael F. [D-CO], Sen. Daines, Steve [R-MT], Sen. Schiff, Adam B. [D-CA], Sen. Barrasso, John [R-WY], Sen. Kelly, Mark [D-AZ], Sen. Lee, Mike [R-UT], Sen. Kennedy, John [R-LA], Sen. Risch, James E. [R-ID], Sen. Moran, Jerry [R-KS], Sen. Capito, Shelley Moore [R-WV], Sen. Boozman, John [R-AR], Sen. Fischer, Deb [R-NE], Sen. Marshall, Roger [R-KS], Sen. Banks, Jim [R-IN], Sen. Cotton, Tom [R-AR], Sen. Graham, Lindsey [R-SC], Sen. Wicker, Roger F. [R-MS], Sen. Coons, Christopher A. [D-DE], Sen. Cramer, Kevin [R-ND], Sen. Hyde-Smith, Cindy [R-MS]