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Introduced March 17, 2026 by Edward John Markey · Last progress March 17, 2026
Limits the low tax rate for long-term capital gains and qualified dividends to taxpayers with taxable income at or below $1,000,000, replaces the current "step-up" in basis at death and most gifts with a deemed sale at fair market value (with limited exceptions), and creates reporting, installment payment, and partial-exclusion rules to ease transition. It also caps like‑kind exchange deferrals for non‑farm real property, changes how the qualified business income deduction is calculated, and adds compliance and recapture rules for certain family farms and businesses. Most changes apply to gifts, deaths, exchanges, and tax years beginning after December 31, 2026.
The bill preserves favorable capital-gains treatment for most taxpayers and offers targeted relief for family farms/businesses while raising taxes and tightening rules for very-high-income filers, but it also shifts many transfers into current taxation, creating liquidity, compliance, and administrative burdens and producing mixed revenue effects.
Most taxpayers with taxable income at or below $1,000,000 (middle- and upper-middle-income households) keep preferential long-term capital gains and qualified dividend tax treatment, avoiding higher capital-gains rates for those filers.
Owners and inheritors of qualifying family farms and closely held family businesses get multiple targeted protections (special tax treatment preserving favorable rates, a 50% exclusion above $1,000,000 for qualifying inherited property, and retention of §1031 farm-rollover treatment) that help preserve family enterprises across generations.
Basis rules at death (fair market value basis) and required reporting from transferors/executors give transferees clearer basis information at transfer, reducing future surprises when property is sold and making it easier to compute taxable gain.
Taxpayers with taxable income above $1,000,000 will face higher tax bills because preferential long-term capital gains and qualified dividend rates are reduced for them, and related changes (including to the 199A deduction base) further increase tax liability for some high-income filers.
Deemed realization at death and elimination of carryover basis for most gifts (after 12/31/2026) can trigger immediate capital-gains tax on transfers of illiquid assets (closely held businesses, farms, collectibles), creating serious liquidity pressures that may force sales or burdensome planning for estates and recipients.
The bill substantially increases compliance, valuation, reporting, and administrative burdens for taxpayers, executors, and the IRS—new thresholds, carve-outs, FMV determinations, installment elections, certification/recordkeeping, and information returns will raise costs and require new rules and systems.