Sponsors (22)
The bill raises substantial revenue and curbs tax‑deferral strategies by taxing unrealized gains and narrowing preferred tax breaks, but does so at the expense of higher taxes for affected taxpayers, reduced certain investment incentives, and materially greater compliance and administrative burdens.
High‑net‑worth taxpayers and their heirs: annual taxation of unrealized (marked‑to‑market) gains and elimination of certain estate step‑up benefits reduce the ability to indefinitely defer or escape tax on appreciation, increasing federal revenue and perceived fairness.
Investors and small‑business owners: narrowing or limiting preferential tax elections (e.g., like‑kind exchanges §1031, certain §351 transfers, Opportunity Zone §1400Z–2, QSBS §1202) broadens the tax base and reduces favored shelters.
Financial institutions, payors, and the IRS: new information‑reporting regimes (new §§6050BB, 6050CC and amendments to §6048) and stronger reporting on deferred compensation and large payments improve IRS visibility and enforcement ability against large, previously opaque tax‑avoidance strategies.
High‑net‑worth taxpayers and some small‑business owners: substantially higher tax bills due to annual mark‑to‑market taxation, accelerated taxation of deferred compensation and limits on tax‑preference elections.
Taxpayers (especially high‑wealth) and their advisors: significant new compliance complexity and reporting burdens to value unrealized gains, make elections, and apply ordering/allocation rules, increasing tax‑preparation costs.
IRS and government budgets: higher administration, guidance, valuation and enforcement costs will be required to implement, audit, and litigate annual mark‑to‑market taxation and new reporting regimes.
Based on analysis of 6 sections of legislative text.
Imposes annual mark‑to‑market tax on unrealized gains for certain wealthy taxpayers, limits borrowing and estate/transfer avoidance, and tightens related tax rules (carrybacks, NIIT, expatriation, §1031/§351).
Introduced September 17, 2025 by Ronald Lee Wyden · Last progress September 17, 2025
Imposes annual taxation on unrealized gains for very high‑income, high‑net‑worth taxpayers by using mark‑to‑market rules and blocks the common “buy, borrow, die” strategy that lets wealthy people avoid tax on appreciation. It also tightens estate/transfer rules so appreciated assets passed to heirs are less likely to escape tax, changes how certain losses can be carried back, expands how the Net Investment Income Tax applies to these taxpayers, narrows like‑kind and certain corporate‑transfer nonrecognition rules for affected entities, and adds special expatriation tax rules for covered expatriates. Most provisions take effect for taxable years beginning after December 31, 2025. The bill targets wealthy individuals, their estates/trusts and entities they control, raises compliance and valuation requirements, and creates new interactions with existing income, estate, and expatriation tax rules.