Sponsors (17)
The bill shifts more tax onto high‑value transfers and high‑income investment income to raise revenue and reduce long‑term tax sheltering, while preserving protections for many heirs, farms, and smaller taxpayers—but it also substantially raises compliance complexity, creates liquidity and interest‑cost risks for estates and small businesses, and introduces new reporting and fairness tradeoffs.
Most taxpayers with taxable income at or below $1,000,000 keep current lower long‑term capital gains and qualified dividend rates, preserving after‑tax investment returns for a large share of investors.
Family farms and many small businesses get targeted protections (special qualifying rules, an added exclusion for certain inherited farm/business gain, and a §1031 carve‑out) that help continuity and reduce forced sales when ownership transfers.
Recipients of gifts or inheritances get basis set to fair market value at transfer plus standardized transferee‑basis reporting, making later capital‑gain calculations simpler and reducing long‑running basis disputes and tax sheltering.
High‑income taxpayers (taxable income above $1,000,000) lose preferential long‑term capital gains/dividend rates, increasing their tax bills and reducing after‑tax returns on investments.
Heirs, family‑business owners, and small‑farm operators may face immediate taxable gain at transfer (or on deemed sales) that can create severe liquidity problems because the taxable asset is often illiquid.
The package creates substantial new complexity and paperwork (new thresholds, definitions, reporting, certifications, tracking and regulatory authority), increasing compliance costs for taxpayers and administrative burden for the IRS.
Based on analysis of 8 sections of legislative text.
Limits preferential capital‑gains rates to incomes ≤ $1,000,000, ends most stepped‑up basis at gift/death (with a $1M indexed death exclusion and limited farm/business relief), adds reporting and installment payment rules, caps 1031 deferrals, and alters the QBI calculation.
Introduced September 11, 2025 by Delia Ramirez · Last progress September 11, 2025
Changes federal tax rules for capital gains, gifts, inheritances, like-kind exchanges, and the qualified business income deduction beginning mostly after 2025. It narrows who gets lower capital‑gains rates, treats many gifts and transfers at death as if sold at fair market value (ending most "step‑up" basis), creates a $1,000,000 exclusion for gain on death (with special rules for family farms/businesses), adds new reporting duties, allows certain estate capital gains to be paid over 2–5 years, caps like‑kind exchange deferral for real property, and changes how pass‑through business income is measured for the QBI deduction. The bill creates many detailed exceptions, reporting and anti‑avoidance rules, recapture provisions for farms and businesses, and regulatory authority for Treasury/IRS to issue implementing guidance. Most changes apply to gifts, deaths, exchanges, and taxable years beginning after December 31, 2025 (some indexing and implementation details begin in 2026).