Bitcoin ($BTC) holders could keep more of their profits if Washington follows through on tax changes currently under discussion at the White House. Capital gains tax, the levy on the profit you realize when you sell an asset for more than its purchase price, is at the center of those conversations. Bloomberg reported Wednesday that President Donald Trump is exploring two ideas with his economic advisers: adjusting gains for inflation and raising exemptions on home sales ahead of November's midterm elections.
What is actually on the table
No legislation exists. The White House told Bloomberg that Trump is exploring ideas and that any policy announcements would come directly from the administration.
Former National Economic Council Director Larry Kudlow, now a Fox Business host, said he spoke recently with Trump about both proposals. Trump "liked the idea of the indexing" and was "very interested" in both measures, Kudlow said. Current NEC Director Kevin Hassett discussed the same ideas on the August 11 episode of Kudlow's Fox Business program, describing them as policies the president is considering ahead of the vote.
Indexing versus a rate cut: the distinction matters
Indexing capital gains to inflation is not the same as cutting the stated tax rate. Here is what it means in practice. Instead of taxing the entire difference between your purchase price and your sale price, the government would first adjust your original cost upward for inflation. Only the portion above that adjusted baseline would count as a taxable gain.
For a long-term Bitcoin holder who bought years ago, that adjustment could shrink the taxable amount considerably, even without any change to the rate itself.
The second proposal would raise the exemption on home sales to cover properties worth $2 million or less. The current exclusion stands at $250,000 for single filers and $500,000 for married couples.
Why cryptocurrency sits inside this conversation
The IRS treats digital assets as property, with Bitcoin listed among its explicit examples. Any broad capital gains reduction would generally reach cryptocurrency holders realizing profits, unless a final law specifically excluded digital assets.
Calculating the fiscal cost is difficult. The IRS does not publish a standalone revenue figure for cryptocurrency capital gains. Coincub's 2024 Crypto Tax Report estimated the United States could collect roughly $1.87 billion from an estimated $9.36 billion in cryptocurrency gains, calculated using average tax rates. Those are third-party estimates, not official government data, and the actual outcome would depend on which assets qualify, how investors respond, and what Congress ultimately passes.
No proposal has been formally introduced.