Time to Heal Act
- Sponsor
- Rep. Barrett, Tom [R-MI-7]
- Committees
- Ways and Means Committee (primary)
- Last action
- Feb 4, 2026
Bottom line
The 'Time to Heal Act' permanently extends the $500,000 home sale gain exclusion for surviving, unremarried spouses, removing the current time limit.
What it actually does
This bill amends the Internal Revenue Code of 1986 to allow individuals whose spouse is deceased to exclude up to $500,000 of gain from the sale of their principal residence, the same amount allowed to married couples filing jointly. This expanded exclusion applies regardless of how much time has passed since the spouse's death, provided the couple met the $500,000 exclusion requirements immediately before the death and the surviving individual has not remarried.
Proponents argue
Supporters argue that this bill provides much-needed financial relief and fairness to surviving spouses, allowing them more time to grieve and adjust to their new financial circumstances without being pressured to sell their home within a limited timeframe to maximize tax benefits. They contend it recognizes the ongoing financial and emotional impact of a spouse's death and simplifies tax planning for grieving individuals.
Opponents contend
Critics might argue that this bill primarily benefits individuals with highly appreciated assets, potentially disproportionately favoring wealthier individuals and reducing federal tax revenue. They may also contend that the existing two-year rule for surviving spouses already provides a significant benefit, and an indefinite extension could create an uneven playing field compared to other single individuals who never married or divorced.
The bill is very short and clear, making it highly accessible for any reader to understand its core purpose and implications.
Section 2(a), amending Section 121(b)(4) of the Internal Revenue Code of 1986
Permanent Extension of Principal Residence Gain Exclusion for Surviving Spouses
This provision changes the tax code to allow a surviving spouse to exclude up to $500,000 in capital gains from the sale of their principal residence. Currently, this higher exclusion amount is generally available to married couples filing jointly, and to surviving spouses only for a limited period (typically two years) after their spouse's death. This bill removes that time limit, allowing the surviving spouse to claim the $500,000 exclusion indefinitely, as long as they have not remarried and the couple met the eligibility requirements for the $500,000 exclusion immediately before the spouse's death.
Supporters argue
Supporters argue that this change offers crucial financial flexibility and peace of mind to surviving spouses, who often face significant financial adjustments and emotional distress after their partner's death. They believe it prevents a 'widow's penalty' by ensuring that the tax benefit earned as a couple is not arbitrarily diminished due to the passage of time after a spouse's death.
Critics contend
Opponents might contend that extending this benefit indefinitely could be costly to the federal budget and primarily benefits those with substantial home equity, potentially exacerbating wealth inequality. They may also argue that the existing two-year window is sufficient to allow for necessary adjustments and that a permanent extension is an overly broad tax break.
Tradeoffs
The provision balances the desire to support grieving spouses with concerns about federal revenue loss and potential equity issues compared to other single taxpayers. It aims to provide compassionate tax treatment but at a cost to the Treasury and potentially creating a disparity with other single individuals.