Last week, President Donald Trump told reporters he would consider legislation proposed by Representative Marjorie Taylor Green to eliminate capital gains taxes for homeowners who sell their primary home and earn a profit.
Learn More: Here’s How Much Every Tax Bracket Would Gain — or Lose — Under Trump’s ‘Big, Beautiful Bill’
Read Next: How Middle-Class Earners Are Quietly Becoming Millionaires — and How You Can, Too
Currently, homeowners who sell their homes and earn a profit above the exclusion amount, which is $250,000 for single tax filers and $500,000 for spouses filing jointly, are required to pay. Considering home values rise over time, more home sellers could face the fact they could be on the hook for capital gains taxes.
But how much could you save if the proposed capital gains tax cut goes through?
How Many Homeowners Could Be Affected
Research by CoreLogic found that homeowners who have mortgages have an average of $303,000 in home equity. High cost of living areas like San Francisco and Hawaii could see higher home equity values.
Find Out: What Trump’s New Tax Law Means for Upper-Middle-Class Families in 2025
According to data by Realtor.com, around one in three of homeowners are over the exclusion amount if they sell their home. The outlet also looked at data of the percentage of homeowners that will be over the exclusion by 2030, which is outlined below.
State | Percentage of Homeowners with Equity Over $250,000 | Percentage of Homeowners with Equity Over $500,000 |
Alaska | 22.5% | 2.7% |
Alabama | 13.4% | 2% |
Arkansas | 11.5% | 1.7% |
Arizona | 48.5% | 10.3% |
California | 62.2% | 30.8% |
Colorado | 59.5% | 18.2% |
Connecticut | 23.9% | 6.8% |
Delaware | 25.8% | 3.9% |
Florida | 47.8% | 11.7% |
Georgia | 31.3% | 5.5 % |
Hawaii | 79.1% | 46% |
Idaho | 54.9% | 13.8% |
Illinois | 12.5% | 2.4% |
Indiana | 13% | 1.6% |
Iowa | 9.8% | 1% |
Kansas | 15.3% | 2.5% |
Kentucky | 14.1% | 1.9% |
Louisiana | 9.8% | 1.6% |
Massachusetts | 62.3% | 23.5% |
Maryland | 31.8% | 6.9% |
Maine | 39.2% | 8.3% |
Michigan | 15.4% | 2.3% |
Minnesota | 22.5% | 3.7% |
Missouri | 14.3% | 2.1% |
Mississippi | 7.9% | 0.7% |
Montana | 53.6% | 18% |
North Carolina | 33.9% | 6.7% |
North Dakota | 16.7% | 2.2% |
Nebraska | 16.9% | 2.3% |
New Hampshire | 50% | 9.3% |
New Jersey | 46.2% | 12.7% |
New Mexico | 20.9% | 3.5% |
Nevada | 43% | 7.6% |
New York | 46.1% | 18.7% |
Ohio | 12.6% | 1.5% |
Oklahoma | 12% | 1.7% |
Oregon | 51% | 12.9% |
Pennsylvania | 20.4% | 3.4% |
Rhode Island | 47.2% | 9.2% |
South Carolina | 28.5% | 6.3% |
South Dakota | 25.4% | 4.4% |
Tennessee | 36.1% | 8.3% |
Texas | 32.9% | 7.1% |
Utah | 61.2% | 16.1% |
Virginia | 35% | 9.4% |
Vermont | 35.6% | 7.9% |
Washington | 64.8% | 24.7% |
Wisconsin | 17.7% | 2.6 % |
West Virginia | 6.8% | 0.6% |
Wyoming | 27.6% | 8.3% |
Washington DC | 51.6% | 25.4% |
How Capital Gains Tax Work on Home Sales
The current tax law stipulates that profits about the exclusion amount will be taxed at long-term capital gains rates. So if your home sale profit was $350,000, as a single filer you would only be taxed on $100,000. Depending on your taxable income, you could be taxed anywhere from 0% to 20%.
These homeowners who are above exclusion amounts could save a significant amount but that’s assuming their taxable income is higher to where the tax actually kicks in.
Here’s a simplified example: As a single person, your taxable income is $45,000 and you sold your home at a $300,000 profit. Since you profited $50,000 above the exclusion, you’re responsible for long-term gains tax. But since your income sits below $48,350, your tax rate is 0%.
What this spells out is that those who are high-income earners and have significant home equity will most likely benefit from the proposed tax cut that’s not in effect yet.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: How Much You Could Save in Every State Under Trump’s Proposed Capital Gains Tax Cut
