President Donald Trump is considering changes to the capital gains tax to enhance earnings for some Americans and improve his party’s success in upcoming elections. Speaking with National Economic Council (NEC) Director Kevin Hassett, Fox Business host Larry Kudlow stated he discussed potential tax changes with Trump, who showed interest in two proposals. Kudlow, previously a NEC director, said Trump favored the idea of indexing capital gains to inflation and increasing exemptions for home sales.
White House Spokesman Kush Desai informed Newsweek that Trump is constantly exploring ideas to improve America’s wealth, stating that official announcements would come directly from the administration.
What Changes Are Being Considered?
Hassett mentioned on Fox Business that Trump and the Republican Party aim to propose fresh policies rather than rely solely on past successes before the midterm elections. While specific tax details weren’t discussed, Kudlow’s proposals would represent significant changes to the current capital gains tax framework, which remained mostly untouched by Trump’s major tax legislation, the One Big Beautiful Bill Act.
The first proposal involves indexing capital gains to inflation, allowing the original purchase price of assets to adjust for economy-wide price increases before calculating taxable gain. For instance, if an investor gains $100,000 on an asset during a period with 10 percent inflation, they would only be taxed on $90,000, unlike the current policy where the full amount is taxed. Proponents argue this adjustment addresses “phantom gains,” which reflect inflation rather than actual value increases.
Additionally, Kudlow said Trump liked the idea of expanding exemptions on home sales, proposing exemptions on properties valued up to $2 million.
Who Stands to Benefit?
Although these changes likely require new congressional legislation, the president can propose and advocate for these modifications. Asset holders, particularly those with significant stock holdings or higher-value real estate, would see the most benefit. By contrast, younger Americans without assets, renters, and homeowners with properties under current exemption levels would not gain from these changes.
Len Burman, co-founder of the nonpartisan Tax Policy Center, said these policies would largely benefit the wealthiest households, as they hold most of the stock market wealth. Federal Reserve data reported by Axios shows that while over 60 percent of Americans own stocks, the wealthiest 10 percent hold 93 percent of the stock market wealth.
Burman explained that the existing exemption for primary residence sales—up to $250,000 for singles and $500,000 for married couples—covers almost all homes from taxes. Houses would need to sell for over $1.25 million to encounter capital gains tax, known as the “luxury threshold.” Realtor.com finds that 90 percent of homes are valued below this level.
With many voters struggling with high housing costs, Burman argued that the policy might appear politically unwise, potentially increasing demand for luxury homes and raising land prices, which could alienate parts of Trump’s base.