No Tax on Takings Act

H.R. 7687 would amend the Internal Revenue Code to change how the federal government taxes property owners when their land or buildings are taken through eminent domain. Currently, when a government entity acquires private property through eminent domain and pays compensation to the owner, any gain between the property's original cost and the compensation received may be subject to federal income tax. This bill would exclude such gains from taxable income, meaning property owners would not owe federal income tax on the difference.

If enacted, this change could provide tax relief to property owners whose land is acquired by federal, state, or local governments for public projects like highways, bridges, or other infrastructure. The practical effect would be that individuals and businesses receiving compensation for eminent domain takings would keep more of their compensation without having to pay federal income taxes on the gain. The bill is currently in the early stages of the legislative process and has been referred to committee for consideration.