H.R. 10690: Capital Loss Inflation Fairness Act

This bill would change how much capital loss an individual taxpayer can use each year to offset income for tax purposes.

What capital losses are

Capital losses happen when someone sells stocks, mutual funds, real estate, or other capital assets for less than they paid for them. Under current law, individuals can use capital losses to offset capital gains, and if losses are still left over, they can deduct up to a limited amount each year against other income.

What the bill would change

The bill would:

• Increase the annual limit on how much net capital loss an individual can deduct against other income from $3,000 to $14,250.
• Set the limit for married people filing separately at $7,125.
• Automatically adjust those dollar amounts for inflation starting with tax years after 2026.

How the inflation adjustment would work

After 2026, the loss limit would rise each year based on a cost-of-living formula tied to inflation. Any increase would be rounded to the nearest $25.

When it would take effect

The change would apply to losses in tax years beginning after December 31, 2025.

Practical effect

In simple terms, taxpayers who have larger investment losses could write off more of those losses against other income in a single year instead of carrying them forward over a longer period. The bill would not change the rules for corporations; it applies to individual taxpayers, not corporations.

Relevant Companies

None found