A New Bill Would Let Senior Sellers Shield $1M in Gains From Federal Tax

A federal bill introduced June 1 would allow senior homeowners to exclude up to $1 million in capital gains from federal taxes when they sell a primary residence they've owned for at least 25 years. Introduced by Rep. Nicole Malliotakis (R-N.Y.) and designated H.R. 9064, the Nest Egg Protection Act targets a specific and often overlooked group: homeowners 65 and older who built significant equity over decades and now face a substantial tax bill if they try to move.

What the Current Law Actually Costs Long-Term Owners

Under rules that have not changed since 1997, individual sellers can exclude up to $250,000 in capital gains on the sale of a primary residence. Married couples filing jointly get $500,000. Those numbers made reasonable sense when the median U.S. home price was $145,000. They make far less sense now, in a market where home values in many metros have tripled or more since that threshold was set.

The math is straightforward and often brutal. A homeowner who paid $200,000 for a house in 1999 and sells it today for $850,000 has a realized gain of $650,000. A single filer in that scenario would owe federal capital gains tax on $400,000 of that profit after the exclusion — potentially tens of thousands of dollars, depending on their tax bracket. For a retiree on a fixed income, that bill can be the deciding factor in whether to move at all.

Data from the National Association of Realtors published last year estimated that roughly 29 million homeowners — about 34% of all owners — could already face capital gains liability above the current exclusion caps. NAR projected that figure could reach 59 million, or 70% of all homeowners, by 2035 if thresholds remain unchanged.

What the Nest Egg Protection Act Would Change — and Who Qualifies

The bill would raise the exclusion to $1 million for both individual and joint filers, provided the seller is at least 65 years old and has owned the home as their primary residence for a minimum of 25 years. Notably, the $1 million cap is the same regardless of filing status — unlike current law, which gives married couples double the individual limit.

Malliotakis framed the proposal as removing a tax barrier that discourages older Americans from selling when it makes sense for them, whether that means downsizing, relocating closer to family, or moving into a care facility. Trade organizations including the Staten Island Board of Realtors and the Brooklyn Real Estate Board publicly backed the bill, characterizing the current exclusion limits as a reason many seniors stay locked in homes that no longer fit their needs.

For context on why her district is ground zero for this issue: the median home price in New York's 11th Congressional District, which covers Staten Island and parts of Brooklyn, is above $700,000 according to Malliotakis' office. Longtime owners in that market face significant exposure under the existing rules.

The bill is not the first push in this direction. Rep. Marjorie Taylor Greene introduced legislation in 2025 that would have eliminated capital gains taxes on primary residence sales entirely. Rep. Craig Goldman (R-Texas) introduced a similar bill, H.R. 7034, in January. Neither has advanced out of committee. Malliotakis is also a co-sponsor of H.R. 1340, the More Homes on the Market Act, which would double the current thresholds and index them to inflation — a more modest change than the Nest Egg Protection Act but with broader applicability.

What This Means If You Are Planning to Sell

If you are a homeowner 65 or older and have lived in your home for two and a half decades or more, this bill is directly about your situation. Here is what to keep in mind right now.

The bill has not passed. It was introduced June 1 and is in the early stages of the legislative process. Nothing about your tax liability has changed yet. Selling today means selling under current law — the $250,000 individual and $500,000 joint exclusion caps still apply.

But the conversation matters to your timing. If this bill or a similar measure were to pass, it could significantly reduce the federal tax you owe on a sale. Sellers who are on the fence — those who want to downsize but have been deterred by the potential tax hit — may want to watch this closely before committing to a timeline. Moving too soon, before any change takes effect, could mean leaving money on the table.

Know your gain before you make any decision. Pull up what you paid for your home, add any documented capital improvements, and compare that adjusted basis against what your home would sell for today. If the resulting gain is close to or above the current exclusion cap, you have a real tax exposure question to bring to an accountant or tax advisor — regardless of what Congress ultimately does.

High-appreciation markets feel this most acutely. If you bought in a coastal metro, a major Sun Belt city, or a similarly competitive market before 2005, there is a real chance your gains exceed the current thresholds. The longer you have owned, the more likely this affects your net proceeds.

Inventory dynamics are also in play. Supporters of the bill argue that tax-locked seniors are one reason housing inventory remains tight in many markets. If legislation like this does pass and older homeowners begin listing properties they had been holding, that could affect local supply — and potentially prices — in certain areas. Sellers who act before any such wave would be selling into thinner inventory, which is generally favorable for pricing.

If you want a fast read on what your home might yield today under current conditions, Local Home Buyers USA's instant-offer tool can give you a baseline number without any commitment.