HR 1340 More Homes on the Market Act: Sponsors, Status, and Effects

The More Homes on the Market Act is a bipartisan bill in Congress that would double the federal capital gains tax exclusion on the sale of a primary residence, raising it from $250,000 to $500,000 for single filers and from $500,000 to $1 million for married couples filing jointly. The House version is H.R. 1340; a Senate companion, S. 3332, was introduced in December 2025. Both bills would also index the new caps to inflation so they keep pace with rising home prices.¹

What the Bill Would Change

Under current law, a homeowner who has owned and lived in a primary residence for at least two of the five years before selling can exclude up to $250,000 of capital gains from federal income tax, or $500,000 for a married couple filing jointly. Those thresholds were set by the Taxpayer Relief Act of 1997 and have never been adjusted for inflation.²

The bill would double both figures and, according to the National Association of Realtors, index them going forward.¹ Had the 1997 caps been tied to the Consumer Price Index, they would already sit at roughly $500,000 and $1 million by 2025. Indexed to home price inflation instead, they would reach about $700,000 and $1.4 million.³ The proposed thresholds, in effect, restore the exclusion to its CPI-adjusted value.

Who Introduced It and Where It Stands

Reps. Jimmy Panetta, a California Democrat, and Mike Kelly, a Pennsylvania Republican, both members of the House Ways and Means Committee, first introduced the bill on September 29, 2022.⁴ They reintroduced it on February 24, 2025, at the start of the 119th Congress.⁵ By late December 2025, H.R. 1340 had picked up 93 cosponsors, including 35 Republicans.⁶

Sen. John Cornyn of Texas introduced the Senate companion, S. 3332, on December 3, 2025, joined by Sens. Michael Bennet of Colorado, Steve Daines of Montana, Adam Schiff of California, John Barrasso of Wyoming, and Mark Kelly of Arizona.⁷ It was referred to the Senate Finance Committee.⁸ Neither chamber’s version had moved beyond committee by the end of 2025, and the provision was not included in the “One Big Beautiful Bill Act” signed into law on July 4, 2025.⁹

The Case Sponsors Are Making

The sponsors frame the bill as a fix for what economists call the “lock-in effect.” Because the exclusion caps have not kept up with decades of rising home values, long-tenured homeowners, especially seniors thinking about downsizing, face a potentially large tax bill on sale. That prospect encourages them to stay put, keeping homes off the market.

Panetta said stagnant exemptions combined with rising prices leave homeowners “financially locked into their homes” while prospective buyers are “locked out of the housing market.”⁵ Kelly said homeowners who spent years investing in their properties are “unfairly punished with massive tax burdens” when they try to sell.⁴

A February 2026 study by Edward J. Pinto of the AEI Housing Center estimated that about 1.9 million homes owned by people over 65 carry gains above the current exclusion limits. If the tax barrier were removed and a third of those households responded over ten years, roughly 600,000 homes, or an average of 60,000 per year, could return to the market.¹⁰

The National Association of Realtors has made the bill one of its top legislative priorities.¹¹ AARP has endorsed the Senate companion.⁸

The Case Against

Researchers at the Brookings Institution and the Urban-Brookings Tax Policy Center argue that raising the cap would deliver a windfall to wealthy homeowners without producing much new supply. Under current thresholds, 95% of all households already owe no federal capital gains tax when they sell a home. Among households aged 65 and older, the figure is 90%.¹² For most sellers, doubling the cap would change nothing because they never hit the current one.

Their distributional analysis found that if the exclusion were doubled, 76% of the total tax reduction would flow to households in the top 10% of the income distribution, and 17% would go to the top 1%. Among seniors, those in the top 5% of income would receive 74% of the benefit.¹³ The Brookings authors concluded the change “cannot plausibly alter selling behavior very much or meaningfully increase housing supply,” and said policies targeting construction barriers, such as local land use rules, would do more.¹²

Related Proposals

The More Homes on the Market Act would raise the exclusion, not eliminate the tax. A separate bill, the No Tax on Home Sales Act (H.R. 4327), introduced by Rep. Marjorie Taylor Greene, would remove the capital gains tax on primary residence sales entirely.¹⁴ In July 2025, President Donald Trump said his administration was “thinking about” eliminating capital gains taxes on home sales. Howard Gleckman of the Urban-Brookings Tax Policy Center said Congress is more likely to raise the exemption than repeal the tax outright.¹⁵

What Happens Next

Two paths have been identified for the bill to become law. It could be attached to a second reconciliation package, though the prospects for one were uncertain as of December 2025. Alternatively, the bipartisan support could make it a candidate for a year-end tax package.¹⁶ NAR has said it is working to attach the measure to must-pass legislation.⁶

State Tax Effects

The federal exclusion also shapes state tax bills in states that conform to federal rules. California, for instance, applies the same $250,000 and $500,000 thresholds to its state income tax; gains above those limits are taxable on both federal and California returns.¹⁷ If Congress raises the federal caps, conforming states would see their own exclusions rise with them, magnifying the effect in high-cost markets where sellers are most likely to exceed the current limits.

1
National Association of Realtors. Outdated Tax Rules Are Freezing the Housing Market
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National Tax Association. The Exclusion of Capital Gains on Home Sales
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AEI Housing Center. Capital Gains Rules on Home Sales and Senior Homeowner Lock-In
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Rep. Jimmy Panetta. Rep. Panetta Introduces Bipartisan More Homes on the Market Act
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Rep. Mike Kelly. Kelly, Panetta Reintroduce Bipartisan Legislation to Address Housing Affordability
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Tax Notes. Two Bills and Maybe Trump Favor Raising Tax Cap on Home Sales
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GovInfo. S.3332 – More Homes on the Market Act
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Sen. John Cornyn. Cornyn, Bennet, Colleagues Introduce Bill to Increase Housing Availability and Affordability
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National Association of Realtors. Big Beautiful Tax Bill Now Law – In Depth Analysis
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AEI Housing Center. Capital Gain Regulations on Home Sales and Baby Boomer Lock-In
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National Association of Realtors. Advocacy Impact
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Brookings Institution. Will Expanding the Capital Gains Exclusion Unlock Housing Supply
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Tax Policy Center. Will Expanding the Capital Gains Exclusion Unlock Housing Supply – Evidence on Who Benefits
14
Congress.gov. H.R. 4327 – No Tax on Home Sales Act
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CNBC. Trump No Capital Gains Taxes Home Sales
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Roll Call. Momentum Builds for Bigger Capital Gains Tax Break on Home Sales
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California Franchise Tax Board. Income From the Sale of Your Home