Equal Tax Act: Higher Capital Gains Taxes for High Earners and Changes to Inherited Assets
This bill aims to equalize the tax treatment of capital gains and earned income for incomes exceeding $1 million. The core change is treating the transfer of assets by gift or death as a sale at fair market value, subjecting unrealized gains to tax. However, the bill includes a $1 million exclusion for gains realized at death, special provisions for family farms and businesses, and an installment payment option.
Key points
Higher Capital Gains Taxes: Preferential tax rates for dividends and capital gains will be limited to incomes of $1,000,000 or less.
Deemed Realization at Gift or Death: Any property transferred by gift or at death shall be treated as sold for its fair market value on the date of such transfer.
Exclusions: The bill excludes up to $1 million of net capital gain realized at death from gross income (adjusted for inflation after 2026).
Family Farms and Businesses: Qualifying family farms and businesses may exclude 50% of the gain exceeding $1 million, provided there is a certification of continued use for 10 years.
Limitation on Like-Kind Exchanges: The exclusion of gain from real estate exchanges is limited to $500,000 annually and $1 million in aggregate, unless the property is used for farming purposes.
Installment Payment Option: Taxpayers may elect to pay the tax on gains realized by reason of death in 2 to 5 equal installments.
Status:
Introduced
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