Trump Weighs Capital Gains Tax Cuts Ahead of Midterms

U.S. President Donald Trump is considering proposing capital gains tax cuts as part of a broader economic agenda Republicans could promote ahead of the 2026 midterm elections, Bloomberg reported Tuesday.

The potential measures could include lowering capital gains taxes and creating exemptions for certain home sales, according to Bloomberg, which cited a senior economic adviser and a former Trump administration official. The proposals come as Trump and Republicans seek to rebuild political support amid concerns over rising living costs, fuel prices and the economic impact of the prolonged war involving Iran.

National Economic Council Director Kevin Hassett indicated that the administration could announce additional policy proposals before the midterm elections. Speaking with Fox Business host Larry Kudlow, Hassett said Trump wants to highlight what Republicans would pursue if they retain or expand their political power.

Kudlow, who served as Trump’s top economic adviser during his first term, also said he had recently discussed indexing capital gains with the president. Trump was reportedly receptive to the idea.

Indexing capital gains to inflation could reduce investors’ tax burdens by adjusting the purchase price of assets for inflation before calculating taxable gains. The policy could particularly benefit investors who have held assets for extended periods.

However, potential capital gains tax cuts could face resistance in Congress as lawmakers grapple with the growing U.S. budget deficit. The Congressional Budget Office estimated that the federal fiscal deficit reached approximately $1.8 trillion during the first 10 months of fiscal 2026.

The deficit has also been affected by the Trump administration’s need to refund a significant portion of tariffs collected over the past year. The refunds followed a Supreme Court decision earlier this year that struck down most of Trump’s tariffs.

The prospect of new tax cuts therefore presents a political and fiscal challenge for Republicans. While lower capital gains taxes and home-sale exemptions could appeal to investors and homeowners, lawmakers must weigh their potential economic benefits against the impact on federal revenues and the already-large budget deficit.