Reps. Panetta, Ways & Means Members Introduce American Affordability Act to Lower Costs for Americans

Washington, DC – United States Representatives Jimmy Panetta (CA-19) joined Ways and Means Tax Subcommittee Ranking Member Mike Thompson (CA-04), Ways and Means Committee Ranking Member Richard E. Neal (MA-01), and other Ways and Means members in introducing the American Affordability Act of 2025. The plan takes a multi-angle approach to lowering the cost of living for working families across the country, with real solutions to expand affordable housing, lower energy bills, cut taxes for the middle class, help student loan borrowers, and protect households from skyrocketing healthcare premiums.

The larger legislation includes Rep. Panetta’s More Homes on the Market Act, which would increase the supply of available homes by removing barriers that discourage homeowners from trying to sell their properties. The bill would amend an out-of-date provision of the tax code that penalizes those looking to sell or downsize their home with large tax bills. Specifically, it would raise the exclusion from capital gains tax on the sale of a primary residence from $250,000 to $500,000 for single filers and from $500,000 to $1 million for joint filers. These existing thresholds, originally set in 1997, have never been adjusted for inflation, and make it nearly impossible for homeowners to sell without facing significant tax burdens.

The American Affordability Act also includes Rep. Panetta’s First-Time Home Buyer Tax Credit Act, to help restore access to the American Dream by establishing a refundable tax credit of up to $15,000 to support first-time buyers. It also includes his Workforce Housing Tax Credit Act, to increase the supply of affordable housing for middle-income families who earn too much to qualify for low-income affordable housing, but not enough to afford housing near where they work.

“In order to make the American Dream achievable again, we need real solutions that will bring down costs for working families in California’s 19^th Congressional District,” said Rep. Panetta. “I’m proud to join my colleagues, who understand that actions speak louder than words, in introducing the American Affordability Act which would take specific, effective action to tackle the affordability crisis and bring down the cost of housing, fuel, food, bills, and more. I’m especially pleased that this legislation includes three of my flagship housing bills, which would increase the supply of affordable housing.”

“Families are doing everything right and still falling behind as costs keep rising,” said Rep. Thompson. “The American Affordability Act is about real relief for families: affordable housing, lower energy bills, more affordable childcare and healthcare, and bigger paychecks. This bill delivers targeted tax relief and smart investments that help families make ends meet and restores the promise that hard work should be enough to get ahead in our country.” 

“While Donald Trump projects and dismisses affordability fears as a ‘hoax,’ Democrats have been and always will be at the front of the fight to lower costs for everyday workers and families,” said Rep. Neal. “Tax Ranking Member Mike Thompson knows that whether it’s tackling the housing crisis, making childcare more affordable, or lowering health and energy costs, we have so much work to do to ease the minds of the American people and foster opportunity. The American Affordability Act is a blueprint for the next step in our fight for what we are united to deliver: lower costs and easier, better lives.”

The American Affordability Act would:  

Expand Access to Affordable Housing 

• Increases the homeowner capital gains tax exemption to encourage more home sales and reduce the cost to buy a home, doubling the threshold to $500,000 for single filers and $1 million for joint filers
• Creates the first-ever monthly Renter Tax Credit for individuals and families paying more than 30% of their income on rent and creates a First-Time Homebuyer Tax Credit to help low- and middle-income earners
• Creates a new tax credit to bridge the gap between the cost of building or repairing a home and the home’s value once it is built, powering the development of 500,000 affordable, single-family homes over the next ten years 
• Incentivizes the conversion of vacant office spaces and other commercial properties into new housing, reserving at least 20% of new units for low-income residents 

Lower Energy Costs 

• Creates a new 30% tax credit for long-range electric transmission to lower the cost of grid modernization projects, taking steps to prevent mass power outages and lower ratepayer bills
• Restores tax credits for homeowners to install home energy efficiency upgrades, solar panels, geothermal, and other cost-reducing power sources
• Spurs the development of American-made clean energy by providing a tax credit to companies that reduce carbon emissions by producing "green" and "blue" hydrogen and fuel cells
• Authorizes tax credits to purchase new and used electric vehicles and electric bikes 

Stop Trump Healthcare Price Hikes 

• Permanently extends expiring Affordable Care Act tax credits, protecting 112,000 Connecticut residents from sky-high premium hikes
• Prevents insurance providers from dropping vaccine coverage due to Secretary Kennedy’s anti-science restrictions, including coverage for MMR, COVID-19 and Hepatitis B shots 

Cut Taxes for Families and Workers 

• Restores the expanded Child Tax Credit for working parents, providing monthly payments of $300 for each child over the age of six and $360 for each child under the age of six
• Extends the Earned Income Tax Credit for adults without children and expands eligibility to cover working young adults
• Permanently extends tax cuts for tipped workers, and expands “no tax on tips” to include automatic gratuities
• Expands the $250 teacher expense tax deduction to include early childhood educators 

Make Childcare More Affordable 

• Increases the maximum dependent care Flexible Spending Account (FSA) contribution from $7,500 to $10,000, automatically adjusting the contribution limit for inflation
• Creates a new $5,000 refundable tax credit to cover startup costs needed to open family childcare centers
• Makes the adoption tax credit fully refundable, opening the door for more low-income families to pursue adoption
• Creates a new tax credit to support working family caregivers 

Help Student Loan Borrowers 

• Doubles the student loan interest tax deduction for married couples, to $2,500 per person and makes any forgiven student loans tax-free
• Expands eligibility for the American Opportunity Tax Credit, to support students during the first six years of their higher education with up to $2,000 per year
• Excludes Pell Grants from income, ensuring aid received through this program is tax-free for students 

Other cosponsors of the American Affordability Act include: Wesley Bell (MO-01), Donald Beyer (VA-08), Brendan Boyle (PA-02), Judy Chu (CA-28), Angie Craig (MN-02), Danny Davis (IL-07), Rosa DeLauro (CT-03), Suzan DelBene (WA-01), Dwight Evans (PA-03), John Garamendi (CA-08), Daniel Goldman (NY-10), Jimmy Gomez (CA-34), Steven Horsford (NV-04), Julie Johnson (TX-32), Timothy Kennedy (NY-26), Doris Matsui (CA-07), Sarah McBride (DE-AL), Kristen McDonald Rivet (MI-08), Morgan McGarvey (KY-03), Gwen Moore (WI-04), Frank Mrvan (IN-01), Stacey Plaskett (VI-AL), Mike Quigley (IL-05), Andrea Salinas (OR-06), Linda Sanchez (CA-38), Bradley Schneider (IL-10), Hillary Scholten (MI-03), Terri Sewell (AL-07), Tom Suozzi (NY-03), and Dina Titus (NV-01). 

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