Sponsors (30)
The bill preserves stepped-up basis rules that help heirs keep family farms and small businesses by avoiding immediate capital gains taxes, at the cost of reduced tax revenue and potential increases in wealth concentration and perceived unfairness in the tax system.
Heirs of family farms and small businesses can inherit assets with a stepped-up cost basis (to fair market value), reducing or eliminating immediate capital gains taxes when they later sell and lowering the likelihood they must sell assets to pay taxes.
Owners and communities benefit from preserved continuity of family-owned farms and small businesses across generations, supporting local economies, jobs, and agricultural stability in rural areas.
Reduces short-term liquidity pressure on inheritors (especially for illiquid assets like land or closely held businesses), allowing more orderly transitions and long-term planning for the enterprise.
Preserving the stepped-up basis reduces realized capital gains tax revenue for the government, which could increase budget deficits or require taxes or cuts elsewhere.
The rule can entrench wealth by allowing asset-rich families to transfer large untaxed appreciation across generations, undermining tax progressivity and making wealth inequality worse.
Creates perceived and real unequal tax treatment between heirs (who avoid recognizing appreciation at death) and people who sell appreciated assets during their lifetimes, which many taxpayers view as unfair.
Based on analysis of 2 sections of legislative text.
States findings and purpose supporting retention of the stepped-up basis rule and warns repeal would harm family farms and small businesses.
Official title: Recognizing the importance of stepped-up basis under section 1014 of the Internal Revenue Code of 1986 in preserving family-owned farms and small businesses.
Introduced March 10, 2025 by Tracey Mann · Last progress March 10, 2025
States congressional findings and purpose defending the stepped-up basis rule in IRC section 1014, saying it lets heirs reset an asset's cost basis to market value at death and that eliminating it would raise taxes on inheritors. Emphasizes risks to intergenerational transfers of family farms, ranches, agribusinesses, and small businesses, citing statistics about family ownership and an ERS study on increased tax burdens for midsized farms.