Rep. Ralph Norman Reintroduces Capital Loss Inflation Fairness Act to Modernize Nearly 50-Year-Old Tax Rule

WASHINGTON — Congressman Ralph Norman (R-SC) reintroduced the Capital Loss Inflation Fairness Act to address a nearly five-decade-old provision of the federal tax code and allow Americans to deduct more of their investment losses from their ordinary income. The current limit of $3,000, or $1,500 for married taxpayers filing separately, has remained unchanged since 1978. Norman’s legislation would increase those limits to $14,250 and $7,125, respectively. Additionally, the bill includes an annual adjustment for inflation. Under current law, losses exceeding the annual limit generally must be carried forward to future tax years. The legislation would allow individual taxpayers to recognize more of those losses sooner and would apply to losses in tax years beginning after December 31, 2025. “ The $3,000 capital loss deduction hasn’t changed since 1978, and everyday Americans shouldn’t be penalized because Congress failed to update an outdated number ,” said Congressman Norman . “ It’s common sense. Raise the limit to reflect today’s dollars, tie it to inflation, and let Americans keep more of their hard-earned money .” “ Inflation shouldn’t be a backdoor tax increase ,” said Congressman Thomas Massie (KY-4) . “ Congress set the capital loss deduction at $3,000 in 1978 and then let inflation erode its value for nearly fifty years. This bill offers some relief and course correction for taxpayers in an increasingly volatile economy. ” “ Republicans are reversing years of Democrats’ big government tax burdens to ensure hardworking Americans can keep more of their money each year, and this legislation does just that ,” said Congresswoman Sheri Biggs (SC-3) . “ I am proud to support this bill because it gives our constituents more breathing room when they take risks, invest, and contribute to our economy. As the cost of living increases, so should the amount you can deduct when you experience a loss. Americans should be able to keep more of their own money. It’s that simple. ” “ The $3,000 capital loss deduction limit has been stuck in the tax code since 1978, even as the value of the dollar has declined dramatically due to inflation. Thankfully, Congressman Norman’s commonsense reform would provide taxpayers and investors with a fairer and more neutral tax treatment of capital gains and losses. NTU is proud to once again endorse the Capital Loss Inflation Fairness Act and looks forward to helping this important legislation reach the president’s desk ,” Thomas Aiello, Vice President of Federal Affairs at National Taxpayers Union . “ The current federal tax code discourages families from saving, leaving them less secure and starving businesses of the capital needed to grow. The Capital Loss Inflation Fairness Act would correct our tax code's uneven treatment of capital gains and losses and strengthen the bottom line for families and businesses alike ,” Patrick Fleenor, Tax Policy Fellow with Americans for Prosperity . The Capital Loss Inflation Fairness Act is originally cosponsored by Reps. Michael Cloud (TX-27), Thomas Massie (KY-4), Sheri Biggs (SC-3), and Andy Harris (MD-1). The bill is supported by the National Taxpayers Union and Americans for Prosperity. Read the bill HERE .