U.S. Rep. Ralph Norman has reintroduced legislation that would raise the federal capital loss deduction cap for the first time since 1978 and tie it to inflation going forward.
WASHINGTON — U.S. Rep. Ralph Norman, R-S.C., has reintroduced the Capital Loss Inflation Fairness Act, which would raise the federal limit on deducting investment losses from ordinary income, according to Norman’s office.
The current cap of $3,000, or $1,500 for married individuals filing separately, has not changed since 1978. Norman’s bill would raise those limits to $14,250 and $7,125, respectively, and would adjust the amounts annually for inflation, according to his office.
Under existing law, losses above the annual cap must generally be carried forward to future tax years. The new legislation would let individual taxpayers claim more of those losses sooner. It would apply to losses in tax years beginning after Dec. 31, 2025, according to the release.
“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deduction hasn’t changed since 1978, and everyday Americans shouldn’t be penalized because Congress failed to update an outdated number,” Norman said. “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.”
U.S. Rep. Thomas Massie, R-Ky., a cosponsor, said in the release: “Inflation shouldn’t be a backdoor tax increase. 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.”
U.S. Rep. Sheri Biggs, R-S.C., also a cosponsor, said the measure gives constituents “more breathing room when they take risks, invest, and contribute to our economy,” adding that deduction amounts should rise along with the cost of living.
The bill is also cosponsored by Reps. Michael Cloud, R-Texas, and Andy Harris, R-Md. It is backed by the National Taxpayers Union and Americans for Prosperity, according to Norman’s office. Thomas Aiello of the National Taxpayers Union and Patrick Fleenor of Americans for Prosperity both issued statements of support included in the release.
Based on a release from U.S. Rep. Ralph Norman (SC-05).
