Sponsors (4)
Introduced March 17, 2026 by Edward John Markey · Last progress March 17, 2026
The bill preserves tax relief for many middle‑income taxpayers and provides targeted protections for family farms and estates, but it shifts tax costs and creates new tax events, reporting requirements, and compliance burdens — especially for recipients of post‑2026 gifts, high‑income investors, estates, and trusts.
Most taxpayers with taxable income at or below $1,000,000 keep preferential (lower) tax rates on dividends and capital gains, preserving lower tax bills for the majority of individual investors and households.
Heirs can exclude up to $1,000,000 of net capital gain on inherited appreciated assets (and qualifying family farm/business beneficiaries can exclude 50% of gain above that amount with a 120‑month continued‑use certification), lowering tax on many inheritances.
Gifts made after 12/31/2026 generally receive a stepped‑to‑market basis equal to fair market value at the time of gift, simplifying basis determination for recipients and potentially reducing immediate capital‑gains tax on later sales.
Gifts made after 12/31/2026 generally lose carryover basis and are stepped to market, which can cause recipients to face immediate or larger future capital‑gains tax bills when they sell appreciated gifted assets.
The bill creates substantial new compliance, reporting, and administrative complexity for taxpayers, estates, trusts, financial institutions, and the IRS (new returns, basis ceilings, lifetime caps, adjustments, and transitional rules), raising tax‑preparation costs and audit uncertainty for many households and businesses.
High‑income taxpayers (taxable income over $1,000,000) will lose preferential lower rates on dividends and capital gains, increasing tax bills for wealthy individuals and potentially changing investment behavior.
Based on analysis of 16 sections of legislative text.
Treats most gifts and inheritances as sold at fair market value, ends broad step‑up basis after 2026, caps preferential gains/dividend rates over $1M, adds reporting, recapture, and limits 1031 deferrals.
Makes large changes to how gains on gifts and inheritances are taxed and limits some tax breaks for high-income taxpayers. It generally treats property given by gift or received at death as if sold at fair market value, ends the usual carryover/step-up basis after 2026, creates a new limited exclusion for death transfers, requires new gift/death reporting, lets certain estate taxes be paid in installments, caps some like‑kind exchange deferrals, and restricts preferential rates on capital gains and dividends above $1,000,000 (with carveouts for qualifying family farms/businesses). The bill takes effect mostly for gifts, deaths, and tax years beginning after December 31, 2026, adds recapture and reporting rules, and includes administrative provisions and interest/penalty rules for deferred payments and noncompliance.