Markus Andrews

There’s a special tax break, known as the Section 121 exclusion, that shields part of your home sales profit from capital gains taxes.
The limits are up to $250,000 for single filers and $500,000 for married couples filing jointly but you must meet IRS rules.
Renting out your home could reduce or eliminate the exclusion, experts say.

Busà Photography | Moment | Getty Images

Capital gains ‘exclusion’ for your home

That tax surprise stems from a special tax break, known as the “Section 121 exclusion,” that shields part of your primary home sales profits from capital gains taxes. The limits are up to $250,000 for single filers and $500,000 for married couples filing jointly.
To qualify for the exclusion, you must meet the IRS ownership and use tests, which require that you owned the home and used it as your primary residence for 24 months of the past five years, with some exceptions. The 24 months of residency, however, don’t have to be consecutive.
You’re generally eligible if you didn’t claim the exclusion for another property within two years before the sale.

Any home sale profit above those thresholds could be subject to 0%, 15% or 20% capital gains taxes, depending on your taxable income. You also could owe net investment income tax of 3.8%, depending on your other investment earnings.
You can reduce your profit by increasing your “basis,” or the home’s original purchase price, by tacking on so-called capital improvements and other expenses.

Landlords may only get ‘a portion of the exclusion’

However, “if you’re renting the home, you’re only going to get a portion of the exclusion,” said Mark Baran, managing director at financial services firm CBIZ’s national tax office. 
For example, if you make $250,000 profit selling your home but rented out the property for three out of the past five years, you would only receive two-fifths of the $250,000 exclusion, or $100,000.
That leaves $150,000 of profit that could be subject to capital gains taxes before any adjustments to the home’s basis.
Alternatively, you could still be eligible for the full $250,000 exclusion if you met the ownership and use tests but didn’t rent out the property, Baran said. More

President Donald Trump’s order pausing all U.S. foreign aid put many charities in jeopardy.
In some cases, individual donors can bridge some of the funding gap.
Here is a list of highly rated nonprofits that have been affected by the freeze on foreign assistance. 

President Donald Trump’s order to suspend all U.S. foreign aid, which was announced on January 20, is currently on hold amid a legal review.
But for nonprofits, charities and public service organizations that rely on federal funding, some damage has already been done.

“Foreign assistance programs don’t operate with an on/off switch,” said Mitchell Warren, executive director of the AIDS Vaccine Advocacy Coalition, which provides HIV prevention resources worldwide.
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About 30% of the overall nonprofit sector’s revenues come from government grants and contracts, according to Diane Yentel, president and CEO of the National Council of Nonprofits, which brought a suit against the federal funding freeze resulting in a temporary restraining order. 
“The temporary restraining order preventing the administration from freezing all federal funding has had a positive effect, with many nonprofit organizations previously unable to access funds to continue their vital work now able to do so,” Yentel said.
However, “some federal agencies continue to make expected funding unavailable, and many nonprofits — especially the smallest among them, with the least resources to fall back on if a federal payment doesn’t come through — are having to make difficult decisions to furlough or lay off staff, or to close programs entirely,” Yentel said.

A worker removes the U.S. Agency for International Development sign on their headquarters on Feb. 7, 2025 in Washington, DC.
Kayla Bartkowski | Getty Images

Trump’s foreign aid freeze and the shutdown of the U.S. Agency for International Development is part of a larger effort to shrink the federal bureaucracy.
Backed by the Trump administration, Elon Musk and his advisory group known as the Department of Government Efficiency said dismantling the USAID is a first step.
“We spent the weekend feeding USAID into the wood chipper,” Musk wrote on his social media platform X on Feb. 3.
Most Americans support foreign aid. A 2024 poll by the Reagan Institute found that 54% of Americans believe the U.S. should be more involved in international affairs, while 33% want less U.S. engagement. Even more — 77% — said the U.S. has a moral obligation to stand up for human rights and democracy around the world.

‘Now is the time to dig deep’

The freeze on foreign assistance funding sent “a shock wave through the nonprofit sector,” said Michael Thatcher, the CEO of nonprofit evaluator Charity Navigator.
Many international organizations operate with less than 100 days of working capital, according to Thatcher, which means “this is going to change their ability to pay their staff and maintain operations,” he said. “About half may not survive.”
In some cases, individual donors can bridge some of the funding gap, Thatcher said. “If some of these causes are things you care deeply about, now is the time to dig deep.”
In fact, foreign assistance only comprises about 1% of the federal budget — or roughly $63 billion in fiscal year 2023 — and less than 0.33% of gross domestic product, according to a Brookings Institution report from September. By comparison, U.S.-based institutions and individual donors contributed about $49.3 billion to overseas causes as of a 2020 tally.

Where to give

“Individual givers and philanthropy on a larger scale has a really important role right now,” said Michael Jarvis, executive director of the Trust, Accountability, and Inclusion Collaborative, a Washington, D.C.-based network of funders that operate around the world.
“There’s no way that private givers can fill the gap that the U.S. government is leaving,” Jarvis said, “but it means that their funds are all the more important and needs to be strategically deployed even more effectively.”
To that end, Charity Navigator compiled a list of highly rated nonprofits that were affected by the funding freeze on foreign assistance, including Save the Children and UNICEF, among others. 
Individual giving “is already an important player and I do think people will step up more now,” Jarvis said. “There are ways people can use their voice effectively and certainly use their money effectively.”
There may even be a tax benefit, depending on how those donations are made.
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Amid efforts to cut wasteful federal spending, billionaire Elon Musk recently turned his focus to people over age 100 receiving Social Security benefits.
Yet some experts say it’s unlikely there’s massive benefit fraud among that age cohort.

Elon Musk speaks as one of his young sons and President Donald Trump listen in the Oval Office of the White House in Washington, D.C., Feb. 11, 2025.
Kevin Lamarque | Reuters

As Elon Musk continues to look for ways to cut federal spending through the Department of Government Efficiency, he has raised questions as to just how long some Social Security beneficiaries have been receiving payments.
With a “cursory examination” of Social Security, “we’ve got people in there that are 150 years old now,” Musk said during a Feb. 11 CNN interview.

In recent days, he re-upped those claims on social media platform X. “Maybe Twilight is real and there are a lot of vampires collecting Social Security,” Musk posted on Feb. 16.
Just because the Social Security Administration has millions of people in its database who are very elderly and not marked as deceased does not necessarily mean benefits are fraudulently being paid, said Alex Nowrasteh, vice president for economic and social policy studies at the Cato Institute, a public policy research organization.
“The amount of fraud is likely miniscule,” Nowrasteh said.

When asked for comment, the White House provided an email statement from Press Secretary Karoline Leavitt citing a 2024 investigation that found the Social Security Administration made about $71.8 billion in improper payments out of almost $8.6 trillion in benefits paid from fiscal years 2015 to 2022.
Notably, deceased beneficiaries were one of multiple reasons that may prompt improper payments, according to the report from the Social Security Administration Office of the Inspector General.

“The Social Security Administration is now working to find even more waste, fraud and abuse in the Administration’s whole-of-government effort to protect American taxpayers,” Leavitt said in the emailed statement.
This week, acting Social Security commissioner Michelle King stepped down over reported concerns over DOGE access to sensitive data at the agency. In a new statement released Wednesday, Lee Dudek, who is now acting commissioner, said the agency plans to prioritize transparency and protect benefits and information.
“The reported data are people in our records with a Social Security number who do not have a date of death associated with their record,” Dudek said. “These individuals are not necessarily receiving benefits.”
The Social Security Administration did not respond to requests for further comment.

Data doesn’t influence benefit payments, expert says

In recent days, Musk has shared data on the numbers of Social Security beneficiaries by age on X. Experts say the data likely came from the Social Security Administration’s electronic file of personally identifiable information on everyone with a Social Security number, known formally as Numident.
Numident is an electronic file that has personally identifiable information — such as name, date of birth and other details — for every individual who has been issued a Social Security number, according to a 2023 Social Security Office of the Inspector General report focused on Social Security number holders ages 100 and up.
The Social Security Administration inputs death information it receives from various sources on Numident, according to the report. From there, the agency uses Numident to create a full file of death information, the Death Master File, that is shared with other agencies that pay benefits to help prevent and detect fraud.
In the 2023 report, the Office of the Inspector General found about 18.9 million Social Security number holders were born in 1920 or earlier and had no death information on their Numident records. However, Census Bureau data estimates at the time of the review showed only about 86,000 individuals living in the U.S. were age 100 or older.

If a death is not properly recorded, that can interfere with efforts to prevent and identify fraud by both federal and private entities, the OIG report said.
Just because Numident records are out of date doesn’t influence the Social Security Administration’s payments, according to a former Social Security Administration employee.
“The payment records that send 70 million checks payments a month aren’t driven by the Numident,” the former Social Security Administration employee said. “To correlate the two is just manipulative.”

For decades, the agency had reached out to beneficiaries who are over 100 years old, who have not recently used Medicare, to verify their identities, the former Social Security employee said.
“To say, ‘Oh, well, there’s 150-year-old people,’ that’s just silly,” the former Social Security Administration employee said. “That particular operation over the years did yield cases where there was fraud being committed, but not a lot of it.”

Undocumented immigrants pay into program

Individuals over age 100 are more susceptible to having their Social Security numbers fraudulently used by undocumented immigrants for work rather than having their benefits stolen, Nowrasteh said.
“A good number of these Social Security numbers are being used by illegal immigrants to work and pay taxes,” Nowrasteh said.
Importantly, that likely means more money coming into Social Security through payroll taxes than leaving the program through benefit payments, according to Nowrasteh.
In tax years 2016 to 2020, employers and individuals received about $8.5 billion in wages, tips and self-employment income from 139,211 Social Security numbers attributed to individuals ages 100 and up, according to the 2023 SSA OIG report that looked at number holders ages 100 and up.
“Probably zero of them are working,” Nowrasteh said of the data. Instead, that revenue into the program is likely coming from undocumented workers who won’t receive benefits, he said.
“Because they’re illegal immigrants, they don’t have access to the benefits on the back end when they retire,” Nowrasteh said.
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Immigrants consumed 21% less welfare and entitlement benefits than native born Americans per capita, or per person, as of 2022, according to new research Nowrasteh co-authored.
If the administration cracks down on payroll taxes coming into Social Security using false numbers, “then it might actually worsen the fiscal soundness of the program and make it insolvent sooner,” Nowrasteh said.
The Social Security Administration relies on ongoing payroll taxes to pay benefits. To supplement those payments, the agency also draws from money set aside in trust funds. Because those trust funds are running low, just 83% of both retirement and disability benefits may be payable starting in 2035, Social Security’s trustees projected last year.
It remains to be seen whether Congress will act sooner to prevent those changes. More

When selling your main home, there’s a tax break that shields up to $250,000 of profits for single filers and $500,000 for married couples filing jointly. But you need to meet certain rules.
An increasing number of home sellers are exceeding those thresholds, according to a 2024 report from CoreLogic.
However, it’s possible to increase your “basis,” or the home’s original purchase price, to reduce your gain, experts say.

Martin Barraud | Ojo Images | Getty Images

As U.S. home equity climbs, owners are more likely to face capital gains taxes from selling property. But a lesser-known tax strategy could help shrink your bill, experts say.
When selling your main home, there’s a special tax break that shields up to $250,000 of profits for single filers and $500,000 for married couples filing jointly. However, you need to meet certain rules.

An increasing number of home sellers are exceeding those thresholds, according to a 2024 report from real estate data firm CoreLogic. Nearly 8% of U.S. homes sold in 2023 exceeded the capital gains tax limit of $500,000 for married couples, up from about 3% in 2019, the report found.
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Those percentages were even higher in high-cost states like Colorado, Massachusetts, New Jersey, New York and and Washington, according to the CoreLogic report.  
Exceeding the $250,000 and $500,000 exclusions is “becoming more common,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
Home sale profits above the $250,000 or $500,000 thresholds are subject to capital gains taxes of 0%, 15% or 20%, depending on your taxable income.

Increase your ‘basis’ to reduce profits

Many home sellers don’t realize they can reduce capital gains by increasing their “basis,” or the home’s original purchase price, according to Mark Baran, managing director at financial services firm CBIZ’s national tax office. 
You can increase your basis by adding “capital improvements,” such as renovations, adding a new roof, exterior upgrades or replaced systems.  
Your “adjusted basis” is generally the cost of buying your home plus any capital improvements made while you own the property.
“That adds up over time and can bring them fully within the [$250,000 or $500,000 capital gains] exclusion,” Baran said.
However, you cannot add home repairs and maintenance, such as fixing leaks, holes, cracks or replacing broken hardware, according to the IRS.

You also can reduce your home sale profit by adding fees and closing costs from the purchase and sale of the home, according to Lucas.
The IRS says some of these expenses could include:

Title fees
Charges for utility installation
Legal and recording fees
Surveys
Transfer taxes
Title insurance
Balances owed by the seller

“Maybe that gets you an extra few thousand” to reduce the profit, Lucas added. More

A U.S. appeals court blocked the Biden administration’s student loan relief plan known as SAVE.
The move will likely lead to higher monthly payments for millions of borrowers.

Former U.S. President Joe Biden speaks about student loan debt relief at Madison Area Technical College in Madison, Wisconsin, on April 8, 2024.
Andrew Caballero-Reynolds | AFP | Getty Images

A U.S. appeals court on Tuesday blocked the Biden administration’s student loan relief plan known as SAVE, a move that will likely lead to higher monthly payments for millions of borrowers.
The 8th U.S. Circuit Court of Appeals sided with the seven Republican-led states that filed a lawsuit against the U.S. Department of Education’s plan. The states had argued that former President Joe Biden lacked the authority to establish the student loan relief plan.

The GOP states argued that Biden, with SAVE, was essentially trying to find a roundabout way to forgive student debt after the Supreme Court blocked his sweeping debt cancellation plan in June 2023.
SAVE, or the Saving on a Valuable Education plan, came with two key provisions that the lawsuits targeted. It had lower monthly payments than any other federal student loan repayment plan, and it led to quicker debt erasure for those with small balances.
Implementing SAVE could cost as much as $475 billion over a decade, an analysis by the University of Pennsylvania’s Penn Wharton Budget Model found. That made it a target for Republicans, who argued that taxpayers should not be asked to subsidize the loan payments of those who have benefited from a higher education.
However, consumer advocates say most families need to borrow to send their children to college today and that they require more affordable ways to repay their debt. Research shows student loans make it harder for people to start businesses, buy a house and even have children.
The court’s ruling comes at the same time that House Republicans are floating proposals that could raise federal student loan bills for millions of borrowers.

The average student loan borrower could pay nearly $200 a month more if the GOP’s plans to reshape student loan repayments succeed, according to an early estimate by The Institute for College Access & Success. Republican lawmakers want to use the extra revenue to fund President Donald Trump’s tax cuts.
How will the end of the SAVE plan affect you financially? If you’re willing to share your experience for an upcoming story, contact me at annie.nova@nbcuni.com.

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President Donald Trump said he plans to fulfill his campaign promise to eliminate income taxes on Social Security benefit income.
A new report found the change would reduce U.S. government revenues by $1.5 trillion over 10 years and increase the federal debt by 7% by 2054.
Meanwhile, high-earning households would benefit the most, the report found.

Republican presidential nominee former President Donald Trump arrives to speak at a campaign event at Harrah’s Cherokee Center on August 14, 2024 in Asheville, North Carolina. 
Grant Baldwin | Getty Images

On the campaign trail, President Donald Trump touted a plan to eliminate income taxes on Social Security benefits.
Now that he’s in the White House, Trump administration officials told CNBC.com last week that the president “doubles down” on that promise.

A bill to eliminate those levies — the Senior Citizens Tax Elimination Act — was recently reintroduced in the House.
Yet, nixing taxes on Social Security benefits may reduce U.S. government revenues by $1.5 trillion over 10 years and increase the federal debt by 7% by 2054, according to a new analysis by the Penn Wharton Budget Model, a nonpartisan, research-based project at the University of Pennsylvania.
For some high-income households, the policy change may result in gains of up to $100,000 over their lifetimes, the research also found. Yet, individuals under age 30 — and particularly people who have not yet been born — may face the largest losses as the federal debt increases and incentives to work and save for retirement decline, it found.
For beneficiaries who have paid into the program for their entire working lives, there is a sense that their benefits should not be taxed, said Kent Smetters, professor of business economics and public policy at Penn’s Wharton School.

How Social Security benefits are taxed

When Social Security reform was passed by Congress in 1983, benefits became subject to taxes for the first time. Then in 1993, lawmakers added a second taxation tier.

Today, beneficiaries who have what is known as “combined income” below $25,000 if they file taxes individually — or $32,000 if they are married and file jointly — generally pay no taxes on their Social Security benefits, the Penn Wharton Budget Model notes.
Combined income is the sum of adjusted gross income, nontaxable interest and half of Social Security benefits.
Individual beneficiaries may pay taxes on up to 50% of their benefits on combined income between $25,000 and $34,000, or for married couples with between $32,000 and $44,000.
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Up to 85% of the benefits would be subject to taxation if they have more than $34,000 in combined income; for married couples, that applies if their combined income is more than $44,000.
Those thresholds are not adjusted for inflation, which means more people over time have become subject to taxes on their Social Security benefits.

How taxes on benefits may be eliminated

Any changes to Social Security would require a bipartisan consensus from both the House and the Senate.
Both congressional chambers overwhelmingly voted recently to push through the Social Security Fairness Act, a new law that ends benefit reductions for individuals who also receive pensions from work that did not include payment of Social Security payroll taxes.
That change is estimated to cost almost $200 billion over 10 years and move the Social Security Trust Fund insolvency six months closer, according to the Congressional Budget Office. Before the change, Social Security’s trustees projected the program’s combined funds may run out in 2035, at which point 83% of retirement, disability and other benefits will be payable.
Eliminating taxes on Social Security benefits would be more expensive — reducing revenues by $1.5 trillion over 10 years — according to the Penn Wharton Budget Model, provided the policy change is implemented in 2025. Social Security’s trust fund depletion date would move two years closer, the analysis found.

Because lawmakers are already dealing with a “really alarming budget situation,” there will be some “pretty strict limits on the tax cuts that would be allowed,” said William McBride, chief economist at the Tax Foundation.
In particular, if Republican efforts to extend the Tax Cuts and Jobs Act are successful, that will cost about $4 trillion, he said. That tax package, which was originally passed in 2017, excludes Social Security.
That doesn’t leave much room for exempting Social Security income from taxes or many of the other “more expensive” ideas that Trump mentioned on the campaign trail, McBride said.
Importantly, changes to Social Security cannot be enacted through the reconciliation process, which may be used to fast-track other budget and tax measures.

Future generations pick up the bill

If taxes on Social Security benefits are eliminated, those at the top of the household income distribution would see the largest tax reductions, according to the Penn Wharton Budget Model. That would range from annual gains of $1,625 to $2,450 in 2026, and it would increase to $4,075 to $5,080 by 2054.
Lower-income earners would see much smaller gains, with those in the second and third quartiles receiving a bump of between $15 and $340 in 2026 and between $275 and $1,730 in 2054, Wharton’s analysis finds.
While all future generations would be worse off, the pinch would be more pronounced for those born further in the future, according to the analysis.
Another proposal in Congress has likewise called for eliminating taxes on Social Security benefits while also requiring high earners to pay more taxes into the program to help mitigate the benefit increases.
However, the concern with those changes is that while older people would see higher benefits, it would put financial pressure on younger generations, Smetters said.
Economists often refer to this as implicit debt, where an intergenerational imbalance causes future generations to be saddled with higher costs.
“Who pays for that benefit is actually younger people,” Smetters said. “They now pay higher taxes to pay for that.” More

Inflation and high interest rates are still taking a toll, but more Americans were able to put money in an emergency fund over the past year, according to a recent report.
Most financial pros recommend having at least six months’ worth of expenses set aside, or more if you are the sole breadwinner in your family or in business for yourself.

While inflation and high interest rates are still taking a toll on consumers, more Americans are able to set aside money in an emergency fund, according to a recent report.
This year, 30% of adults said they have more emergency savings now compared to one year ago, the report by Bankrate found.

More than half of Americans also said they have more emergency savings than credit card debt, an improvement from previous years.
“The number of households reporting more savings than one year ago has been steadily increasing since we began measuring it in 2022, and for the first time exceeds those reporting less savings than the prior year,” said Greg McBride, chief financial analyst at Bankrate. “This is evidence that as the pace of inflation has slowed, it has enabled more Americans to make progress in building, or rebuilding, their emergency savings.”
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Soaring inflation in the wake of the pandemic made it harder to make ends meet. At the same time, the Federal Reserve’s most aggressive interest rate-hiking cycle in four decades made it costlier to borrow.
Although inflation has eased significantly, it’s still above the Federal Reserve’s 2% goal.

“Just like consumers, the Federal Reserve wants to see further cooling of inflation,” said Mark Hamrick,  Bankrate’s senior economic analyst.
Fed officials are watching closely as they contemplate their next monetary policy moves. The central bank cut its benchmark rate by a full percentage point in the second half of 2024, but policymakers have been advocating a more cautious pace ahead as they evaluate the overall strength of the labor market and President Donald Trump’s policy ramifications.
In remarks before the Senate Banking Committee last week, Federal Reserve Chair Jerome Powell said the Fed doesn’t need to move quickly to ease monetary policy.
“With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” he said.
Shortly after taking office, Trump said he would “demand” that interest rates come down “immediately.” However, in subsequent remarks, Trump said he agreed with the decision to keep rates in place.

Why an emergency fund is critical

Having an emergency savings account is key for weathering any sort of financial shock. Research shows that having as little as a few hundred dollars set aside greatly reduces the risk that a family will miss a rent or mortgage payment or be forced to skip medical care.
In addition to helping avoid financial hardship in the short term, emergency savings can also protect long-term financial security. 
According to research by the AARP Public Policy Institute, 53% of U.S. households do not have an emergency savings account, including half of people over age 50, which makes it more likely they will tap their retirement accounts in a crisis.

How to build an emergency savings account

For now, savers can make the most of higher rates by setting some money aside in a high-yield savings account.
“While the Fed putting the brakes on interest rate cuts stinks for those with debt, it is welcome news for savers,” said Matt Schulz, chief credit analyst at LendingTree.
In recent years, top-yielding online savings accounts have offered the best returns in more than a decade and still pay nearly 5% — up from around 1% in 2022, according to Bankrate.
“Returns on high-yield savings accounts have fallen from their record levels as the Fed has moved to lower rates. However, as the Fed pauses, that decline should slow as well,” Schulz said. “Your best move is to keep building that emergency fund.”
Most financial experts recommend having at least three to six months’ worth of expenses set aside, or more if you are the sole breadwinner in your family or in business for yourself.
“While we don’t have any idea what the economy will look like in three months, six months or a year or more, we absolutely know that building a stable financial foundation today will help you better weather whatever storm might be ahead,” Schulz said.
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