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H.R. 7131House119th Congress (2025-2027)In Committee

Middle Class Home Tax Elimination Act

Sponsored by Scott FitzgeraldRep. Scott Fitzgerald (R-WI)
Introduced January 16, 2026

AI-Generated Summary

Updated February 3, 2026 at 12:50 PM UTC

The Middle Class Home Tax Elimination Act would get rid of the current dollar limits on the tax‑free gain homeowners can claim when they sell their main home. By amending the Internal Revenue Code, the bill would let taxpayers exclude all of the profit from a qualifying home sale, no matter how large. The changes apply to sales that happen after the law becomes effective and affect anyone who sells a principal residence.

Key Provisions

  • Amends Section 121(b) of the Internal Revenue Code to remove the $250,000 (single) and $500,000 (married) caps on the exclusion of gain when a principal residence is sold, effectively allowing unlimited exclusion.
  • Re‑numbers the remaining paragraphs of Section 121(b) after striking the capped provisions.
  • Makes matching changes to Section 121(c) so references to the removed caps are deleted and the text aligns with the new unlimited exclusion.
  • Sets the changes to take effect for any home sale that occurs after the law is enacted.

Legislative Activity

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HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

January 16, 2026

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HouseIntro Referral

Introduced in House

January 16, 2026

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

January 16, 2026

Bill Text

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Introduced in HouseIssued January 16, 2026

I

119th CONGRESS

2d Session

H. R. 7131

IN THE HOUSE OF REPRESENTATIVES

January 16, 2026

Mr. Fitzgerald introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to eliminate the dollar limitations on the exclusion of gain from sales of principal residences, and for other purposes.

1.

Short title

This Act may be cited as the Middle Class Home Tax Elimination Act.

2.

Elimination of dollar limitations on exclusion of gain from sales of principal residences

(a)

In general

Section 121(b) of the Internal Revenue Code of 1986 is amended—

(1)

by striking paragraphs (1), (2), and (4), and

(2)

by redesignating paragraphs (3) and (5) as paragraphs (1) and (2), respectively.

(b)

Conforming amendments

Section 121(c) of such Code is amended—

(1)

in paragraph (1), by striking , and subsection (b)(3) and all that follows through 2 years and inserting , and subsection (b)(1), shall not apply, and

(2)

in paragraph (2)(A)(ii), by striking subsection (b)(3) and inserting subsection (b)(1).

(c)

Effective date

The amendments made by this section shall apply to sales and exchanges after the date of the enactment of this Act.