S.798 - Capital Gains Inflation Relief Act of 2025 (119th Congress)
Summary
The Capital Gains Inflation Relief Act of 2025 proposes amending the Internal Revenue Code of 1986 to index certain assets for capital gains calculations. This adjustment would apply solely to individuals, not corporations, and only to assets held for more than three years. The indexed basis, which accounts for inflation, would be used to determine gain or loss upon sale or disposition.
Expected Effects
The primary effect would be to reduce the amount of capital gains taxes paid on certain assets by factoring in inflation. This could incentivize investment in assets like stocks, digital assets, and tangible property. The bill also includes provisions to prevent abuse, such as rules regarding related-party transactions and transfers designed to increase the inflation adjustment.
Potential Benefits
- Reduced capital gains taxes for individuals on long-term investments.
- Potential incentive for investment in stocks, digital assets, and tangible property.
- More accurate reflection of real gains by accounting for inflation.
- Could simplify tax calculations by providing clear guidelines for indexing.
- May encourage longer holding periods for assets.
Most Benefited Areas:
Potential Disadvantages
- Increased complexity in tax calculations due to the indexing mechanism.
- Potential for abuse through related-party transactions or transfers designed to inflate the adjustment.
- Benefits primarily accrue to individuals with significant capital gains, potentially exacerbating wealth inequality.
- May reduce government revenue due to lower capital gains tax collections.
- The exclusion of corporations from the indexing adjustment could create disparities in investment incentives.
Most Disadvantaged Areas:
Constitutional Alignment
The bill falls under the purview of Congress's power to lay and collect taxes, duties, imposts, and excises, as outlined in Article I, Section 8, Clause 1 of the Constitution. The uniformity clause might be relevant if the application of the indexing is not uniform across all states. The bill does not appear to infringe on any individual rights enumerated in the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).