The Capital Loss Inflation Fairness Act would increase the annual limit on capital losses that individual taxpayers can deduct against other income from the current $3,000 to $14,250, or $7,125 for married couples filing separately. The bill also automatically adjusts this limit each year to account for inflation, starting in 2026, using the same cost-of-living adjustment formula applied to other parts of the tax code. This change would affect any individual investor or taxpayer who sells stocks, real estate, or other assets at a loss and wants to use those losses to reduce their taxable income. The legislation has no direct federal spending associated with it, though it would reduce tax revenue by allowing larger deductions for investment losses. The changes would take effect for losses incurred in tax years beginning after December 31, 2025.