This bill allows individual taxpayers to adjust the cost basis of certain long-held assets for inflation when calculating capital gains taxes. Specifically, if an individual sells stocks, digital assets (like cryptocurrency), or tangible property that they've owned for more than three years, they can increase the original purchase price by the amount inflation has risen since they bought it—measured using the gross domestic product deflator. This effectively reduces the taxable gain on the sale. The bill applies to assets purchased after December 31, 2025, and includes common stocks in U.S. and certain foreign corporations, cryptocurrencies and blockchain-based digital assets, real estate, and other tangible property used in business. The adjustment does not apply to sales between related persons, and the IRS can disallow the adjustment if it appears designed primarily to exploit the tax benefit. The bill excludes corporations from this benefit and includes special rules for investment funds and partnerships that pass the benefit through to individual investors.
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