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Limits the use of low capital‑gains/dividend tax rates for very high incomes, and creates a new rule that treats most property transferred by gift or at death as sold at fair market value — effectively ending the broad "step‑up" in basis for many transfers. It provides a $1,000,000 exclusion (with partial extra relief for qualifying family farms/family businesses that continue operations for 10 years), new reporting duties for donors/executors, an option to pay death‑related gain in annual installments, caps on certain real‑estate like‑kind exchanges, and changes to the qualified business income deduction calculation. Most changes take effect for gifts, deaths, and taxable years beginning after December 31, 2025.
The bill tightens deferral opportunities and increases reporting to raise near‑term tax collection and tax‑system transparency while preserving some middle‑income and farm protections, but it shifts many gains into immediate or recurring taxation, increases compliance costs and legal uncertainty, and raises practical liquidity and cost burdens for heirs, trusts, and investors.
Heirs and recipients of estates can exclude up to $1,000,000 of net capital gain at death (indexed after 2026), and qualifying family farms/businesses can exclude an additional 50% above that, reducing immediate tax liability for many beneficiaries and supporting continued family ownership.
Heirs and estates can elect to pay tax on gains recognized at death in installments over 2–5 years, giving estates liquidity relief and time to avoid forced sales to meet tax bills.
The bill increases transparency and IRS information for transfers: it standardizes written basis/FMV statements for recipients, requires structured reporting to Treasury, and grants regulatory authority to block avoidance, which should improve tax administration and help detect underreported gain.
Most gifts and many transfers at death will trigger immediate recognized gain (eliminating carryover basis after Dec 31, 2025), and trusts will face periodic deemed sales (every 30 years), creating new immediate or recurring tax bills that significantly complicate estate planning for middle‑class families, small businesses, and seniors.
The bill substantially increases compliance, valuation, and administrative burdens (new information returns, recordkeeping, valuation disputes, and tracking caps/lifetimes), raising professional preparer costs and IRS administration load across multiple provisions.
High‑income taxpayers (taxable income over $1,000,000) may lose preferential capital gains and dividend rates, increasing tax liabilities for wealthier investors.
Introduced September 11, 2025 by Delia Ramirez · Last progress September 11, 2025