Sponsors (30)
The bill protects heirs of family farms and small businesses from disruptive tax bills and helps preserve generational transfers and rural continuity, but does so at the cost of reduced federal revenue and unequal benefits that can concentrate wealth and favor family succession over other buyers or succession models.
Heirs of farms and small businesses (including many family-owned farms) can reset an inherited asset's cost basis to fair market value, substantially reducing immediate capital gains tax when they sell and easing the financial burden of succession.
Family-owned farms and small businesses are more likely to remain in family hands and continue operations after an owner's death, helping preserve rural economic stability and local food production by preventing forced sales to cover tax bills.
Preserving stepped-up basis reduces taxable gains realized at transfer, which lowers federal tax revenue compared with taxing built-in appreciation at death.
The benefit disproportionately helps wealthier households that hold highly appreciated assets, contributing to intergenerational wealth concentration and unequal tax treatment.
Heirs using stepped-up basis and family succession models gain an advantage relative to non-family buyers or structured business-successions, potentially disadvantaging buyers or alternative succession arrangements that don't receive similar tax relief.
Based on analysis of 2 sections of legislative text.
Expresses findings that stepped-up basis helps family farms and small businesses and warns eliminating it would raise taxes and threaten generational transfers.
Expresses congressional findings that the tax rule known as the stepped-up basis (Internal Revenue Code section 1014) lets heirs reset the cost basis of inherited assets to fair market value and that this rule is important to family farm and small business succession. The text cites statistics about the prevalence of family-owned farms and businesses and an Economic Research Service estimate that eliminating stepped-up basis would raise tax liability for a large share of midsized farms, and concludes that removing the rule could threaten generational transfers of farms, ranches, agribusinesses, and small businesses.
Introduced March 10, 2025 by Tracey Mann · Last progress March 10, 2025