PlainBillCongress, translated.Legislation. Context. Public interest.Referred to the House Committee on Ways and Means.
Congressional Research Service
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People & committees
Rep. Landsman, Greg [D-OH-1] · D–OH
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
Source last updated: Oct 6, 2026. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2026-09-14 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
The bill would create an annual tax credit of up to $4,200 for an eligible individual, or $8,400 on a joint return when both spouses qualify, with smaller credits as income rises. Eligible individuals would be U.S. citizens or nationals who are not another taxpayer’s dependents. It would also change when people with very high incomes or assets, and certain trusts and estates, pay investment taxes. Covered tradable investments would generally be taxed annually as though sold, while qualifying transfers of nontradable investments with gains would trigger an added charge for delayed taxation. These are proposed changes.
there shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to $4,200 (twice such amount in the case of a joint return with respect to which both spouses are eligible individuals).
the term eligible individual means any individual who— (1) is a citizen or national of the United States, and (2) is not a dependent (as defined in section 152) of another taxpayer.
shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as the taxpayer’s modified adjusted gross income bears to $100,000 (twice such amount in the case of a joint return).
gain or loss shall be recognized and taken into account in the taxable year in which the taxable event occurs as if the taxpayer had sold the tradable covered asset for its fair market value
if there is gain from the applicable transfer, the tax imposed by this chapter for the taxable year (determined without regard to this section) shall be increased by the sum of the deferral recapture amounts determined under subsection (b) for each such transfer.
any taxpayer— (A) which is an individual who met either the income test of paragraph (2) or the asset test of paragraph (3) for each of the 3 immediately preceding taxable years
(B) which is— (i) an applicable trust, or (ii) the estate of an individual who was an applicable taxpayer for any taxable year during the 4-taxable-year period ending with the taxable year in which the individual died.
Section 101 would provide a $4,200 credit, doubled on a joint return when both spouses qualify. The credit would decrease proportionally with income, reaching zero at $100,000 of modified adjusted gross income, or $200,000 for joint returns. That income measure adds back amounts excluded under three specified tax provisions. The credit would apply to tax years beginning after December 31, 2026.
an amount equal to $4,200 (twice such amount in the case of a joint return with respect to which both spouses are eligible individuals).
shall be reduced (but not below zero) by the amount which bears the same ratio to such credit (as so determined) as the taxpayer’s modified adjusted gross income bears to $100,000 (twice such amount in the case of a joint return).
the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933.
The amendments made by this section shall apply to taxable years beginning after December 31, 2026.
The new investment-tax rules would generally cover an individual who met either an income test exceeding $100 million or an asset test exceeding $1 billion in each of the three preceding tax years, including relevant years before enactment. The thresholds would be halved for married people filing separately. Marriage to a covered taxpayer, or filing separately from a covered spouse, could also bring a person into coverage.
an individual who met either the income test of paragraph (2) or the asset test of paragraph (3) for each of the 3 immediately preceding taxable years (including taxable years beginning before the date of the enactment of this part which are included in any such 3-taxable-year period)
the applicable adjusted gross income of the taxpayer for the taxable year exceeds $100,000,000 ($50,000,000 in the case of a married individual filing separately).
the aggregate applicable value of all tradable and nontradable covered assets held by the taxpayer as of the close of the taxable year exceeds $1,000,000,000 ($500,000,000 in the case of a married individual filing separately).
If an individual was an applicable taxpayer for the taxable year before the individual became a married individual (within the meaning of section 7703), such individual and the individual's spouse shall be treated as applicable taxpayers for such taxable year of marriage and subsequent taxable years until such status is otherwise terminated under this section.
If a married individual filing separately is treated as an applicable taxpayer for any taxable year, such individual's spouse shall be treated as an applicable taxpayer for such taxable year.
Certain trusts would qualify using lower thresholds: income exceeding $10 million or assets exceeding $100 million in each of the three preceding years. Specified trusts would be excluded. Estates would qualify if the deceased person was covered in any year of the four-year period ending with the year of death. For nonresident alien individuals, the tests would use $50 million of income connected with U.S. business and $500 million of assets producing that income. Assets in grantor trusts would count toward the specified owners’ asset tests.
a trust (other than a grantor trust) which, for each of the 3 taxable years immediately preceding such taxable year
substituting $10,000,000 for the dollar amount otherwise in effect for such taxable year under such paragraph
substituting $100,000,000 for the dollar amount otherwise in effect for such taxable year under such paragraph.
Such term shall not include— (A) a qualified disability trust (as defined in section 642(b)(2)(C)(ii)), (B) any portion of a trust which consists of property permanently set aside for the exclusive use of an organization described in section 170(c), (C) a pooled income fund (as defined in section 642(c)(5)) or a cemetery perpetual care fund (as described in section 642(i)), (D) a settlement trust (as defined in section 646), (E) any charitable remainder annuity trust (as defined in section 664), (F) any charitable remainder unitrust (as defined in section 664), or (G) any other category of trust identified in regulations or guidance provided by the Secretary.
the estate of an individual who was an applicable taxpayer for any taxable year during the 4-taxable-year period ending with the taxable year in which the individual died.
substituting $50,000,000 for the dollar amount otherwise in effect for such taxable year under such paragraph, and (ii) the applicable adjusted gross income of such individual shall be equal to the taxable income of such individual, determined by only taking into account items of income, gain, deduction, and loss which are effectively connected with the conduct of trades or businesses within the United States.
substituting $500,000,000 for the dollar amount otherwise in effect for such taxable year under such paragraph, and (ii) only assets which produce income described in subparagraph (A) shall be taken into account.
the assets of a grantor trust shall be included in the assets of— (i) the grantor of such trust if the grantor is considered the owner of such assets, and (ii) if a person other than the grantor is considered the owner of such assets, both the grantor and such person.
An individual would generally remain covered until neither test was met at half the usual thresholds for three preceding years and the individual elected to leave. A special election would allow earlier departure after divorce or separate maintenance if the following year’s income did not exceed $1 million and assets did not exceed $10 million. Someone who later reentered coverage would not receive the first-year payment options again, and the intervening ownership period would count when calculating charges on nontradable assets.
shall continue to be so treated until the first taxable year with respect to which— (i) the taxpayer does not, for each of the 3 taxable years immediately preceding such taxable year, meet either— (I) the income test of paragraph (2) in effect for such preceding taxable year, or (II) the asset test of paragraph (3) in effect for such preceding taxable year, except that each such paragraph shall be applied for purposes of this clause by substituting an amount equal to one-half of the dollar amount otherwise in effect for such taxpayer under such paragraph for each such preceding taxable year for such dollar amount, and (ii) the taxpayer elects, in such manner and form and at such time as the Secretary may prescribe, not to be so treated for such first taxable year.
an applicable taxpayer ceases to be a married individual by reason of a decree of divorce or separate maintenance issued during any taxable year
such taxpayer, for the first taxable year following the taxable year described in clause (i), does not meet either— (I) the income test of paragraph (2), except that such paragraph shall be applied for purposes of this subclause by substituting $1,000,000 for the dollar amount otherwise in effect for such taxpayer under such paragraph, or (II) the asset test of paragraph (3), except that such paragraph shall be applied for purposes of this subclause by substituting $10,000,000 for the dollar amount otherwise in effect for such taxpayer under such paragraph, then such taxpayer may elect, in such manner and form and at such time as the Secretary may prescribe, not to be treated as an applicable taxpayer beginning with such first taxable year.
Subsection (a) shall not apply to any taxable year in which the taxpayer is again treated as an applicable taxpayer
the taxpayer's holding period of such asset for purposes of section 492 shall include all periods during which the taxpayer's status as an applicable taxpayer was previously terminated and the taxpayer held such asset.
The asset-tax rules would exclude cash, specified retirement and savings plans, and private-placement life insurance and annuity contracts from direct covered-asset treatment, but count them toward the asset threshold. Tradable assets would include assets traded through markets or matching platforms and assets Treasury determines can reasonably be valued annually. Other assets would generally use the highest specified valuation measure. Outstanding debt and other approved liabilities would generally reduce aggregate asset value.
the term covered asset means any asset other than— (1) any interest of the taxpayer in an applicable savings plan or in a defined benefit plan, (2) any cash or cash equivalent, or (3) any private placement life insurance or annuity contract described in section 72(e)(12)(D).
Any asset excluded from treatment as a covered asset under paragraph (1), (2), or (3) of subsection (a) shall be taken into account as a nontradable covered asset in computing the aggregate applicable value
(A) interests in such asset are traded on an established securities market, (B) interests in such assets are readily tradable on a secondary market (or the substantial equivalent thereof), (C) interests in such assets are available on an online or electronic platform that regularly matches, or facilitates the matching of, buyers and sellers of such assets, or (D) such asset is an asset for which the Secretary determines there is a reasonable basis to determine the asset’s fair market value annually
The applicable value of any nontradable covered asset as of any date shall be the greatest of— (A) the original cost basis of such asset, (B) the adjusted basis of such asset, (C) the value determined as of the date of the last event with respect to the asset which establishes such value, (D) in the case of an asset the value of which is included in an applicable financial statement, the value in the latest available statement, (E) the value of such asset determined for purposes of using such asset to secure any indebtedness, and (F) the value of such asset determined under such other valuation method as the Secretary may prescribe.
Except as provided by the Secretary, the aggregate applicable value of all covered assets of the taxpayer as of any date (determined without regard to this paragraph) shall be reduced by the aggregate outstanding amount of— (A) indebtedness of the taxpayer as of such date, and (B) any other liabilities (other than indebtedness) of the taxpayer as of such date which the Secretary determines are appropriate to be taken into account for such purpose.
Covered taxpayers would calculate gain or loss on tradable assets at each year-end as though they had sold them at market value, even without an actual sale. Certain otherwise tax-deferred transactions would also trigger this treatment. Year-end gains and losses on capital assets would generally receive long-term capital treatment, subject to rules preserving ordinary-income treatment. Later tax calculations would be adjusted to account for gains or losses already recognized.
gain or loss shall be recognized and taken into account in the taxable year in which the taxable event occurs as if the taxpayer had sold the tradable covered asset for its fair market value
the term taxable event means, with respect to any tradable covered asset— (1) the holding of such asset as of the close of any taxable year with respect to which a taxpayer is an applicable taxpayer, and (2) any disregarded nonrecognition event.
except as provided in subsection (c)(1), gain or loss taken into account by reason of a taxable event described in subsection (b)(1) with respect to a tradable covered asset which is a capital asset shall be treated as long-term capital gain or long-term capital loss, respectively
such gain or loss— (A) is treated as gain or loss from the sale or exchange of an asset which is not a capital asset, or (B) is treated as ordinary income or loss on a basis other than the taxpayer’s holding period in such asset.
proper adjustments shall be made in the amount of gain or loss subsequently realized for gain or loss taken into account under paragraph (1).
Qualifying transfers of nontradable assets with gains would trigger an added interest-based charge for postponing tax. The calculation would generally spread the gain across the ownership period, moving gain allocated before coverage into the first covered year, and use tax-underpayment interest rates plus one percentage point. The charge would be capped at the gain multiplied by the difference between 49 percent and the specified capital-gain or ordinary-income tax rate. Ordinary-course business sales would be excluded from the general transfer definition, while specified otherwise tax-deferred transactions would be included.
if there is gain from the applicable transfer, the tax imposed by this chapter for the taxable year (determined without regard to this section) shall be increased by the sum of the deferral recapture amounts determined under subsection (b) for each such transfer.
the aggregate amount of interest (determined in the manner provided under paragraph (3)) on the deemed tax amount determined under paragraph (2) for each taxable year to which gain is allocated under paragraph (2)(A) and which precedes the taxable year of the applicable transfer.
allocating the amount of gain from such transfer ratably to each day in the taxpayer's holding period of such asset
any gain allocated under such subparagraph to any taxable year preceding the first taxable year for which the taxpayer is treated as an applicable taxpayer shall be allocated to such first taxable year.
by using the rates determined under section 6621(b) (plus 1 percentage point), and the method applicable under section 6621, for underpayments of tax for such period.
The amount determined under subparagraph (A) with respect to any applicable transfer shall not exceed the applicable percentage of the gain from such transfer.
the applicable percentage is the excess of— (i) 49 percent, over (ii) in the case of the transfer of a nontradable covered asset which— (I) is a capital asset, the rate of tax in effect under section 1(h)(1)(D) for the taxable year of the transfer, or (II) is not a capital asset, the highest rate of tax in effect under section 1 for such taxable year.
any sale, exchange, disposition, or other transfer if— (i) gain or loss (if any) is, without regard to this part, recognized under this chapter on such sale, exchange, disposition, or other transfer, and (ii) such sale, exchange, disposition, or other transfer is not in the ordinary course of a trade or business, and (B) any disregarded nonrecognition event.
The term disregarded nonrecognition event means— (A) any exchange to which section 351 applies, (B) any exchange to which section 1031 applies
The delayed-tax charge would also cover certain unusually large dividends on nontradable corporate stock and capital-gain dividends from nontradable real estate investment trusts. The excess-dividend calculation would generally use dividends above 125 percent of the preceding three-year average, or the shorter prior ownership period, with a first-year exception. Net capital losses could reduce the charge, with a corresponding reduction in losses available to carry forward.
any excess dividend shall be treated as gain from an applicable transfer of a nontradable covered asset occurring on the date such dividend is received.
125 percent of the average amount of dividends received in respect of such stock by the taxpayer during the 3 preceding taxable years (or, if shorter, the portion of the taxpayer’s holding period before the taxable year).
Except as provided by the Secretary, the total excess dividends with respect to any stock shall be zero for the taxable year in which the taxpayer’s holding period in such stock begins.
stock in a real estate investment trust which is a nontradable covered asset, any capital gain dividend received by such taxpayer from such entity shall be treated as gain from an applicable transfer of a nontradable covered asset occurring on the date such dividend is received.
If a taxpayer has a net capital loss for any taxable year for which there is an increase in tax under subsection (a)(2), such increase in tax shall be reduced (but not below zero) by the credit equivalent of such net capital loss.
the net capital loss for a taxable year to which paragraph (1) applies (determined without regard to this subsection) shall be reduced (but not below zero) by an amount equal to the amount of the reduction under paragraph (1) for such taxable year divided by the rate of tax in effect under section 1(h)(1)(D) for such taxable year.
Partnerships, S corporations and other designated pass-through entities would face special reporting rules concerning covered significant owners who directly hold nontradable interests, and qualifying indirect holdings reached through the notice rules. Significant ownership would generally mean at least 5 percent ownership or more than $50 million in nontradable interests; significant ownership alone would not trigger the initial notice requirement. Covered taxpayers meeting the direct-holding conditions would notify the entity of their status and include their share of gains and losses reported under effective notices. Failing to give a required notice would not eliminate that tax obligation. Notices would extend through qualifying ownership chains subject to the significant-owner condition. An entity could elect to apply the annual tradable-asset rules itself, with Treasury consent required to revoke the election.
The term applicable entity means any— (A) partnership, (B) S corporation, or (C) other pass-through entity specified in regulations or guidance prescribed by the Secretary.
(i) is a 5-percent owner with respect to such entity, or (ii) holds nontradable interests in such entity with an aggregate applicable value of greater than $50,000,000.
owns (or is considered as owning within the meaning of section 318) at least 5 percent of
In the case of the first taxable year for which a taxpayer— (I) is an applicable taxpayer, (II) is a significant owner of an applicable entity, and (III) holds directly a nontradable interest in such applicable entity, such taxpayer shall, at such time and in such manner as the Secretary shall prescribe, notify such applicable entity that such taxpayer is a taxpayer meeting the requirements of subclauses (I), (II), and (III) and that the applicable entity is subject to the notice requirements under subsection (c) with respect to such taxpayer.
Each applicable taxpayer for which a notice with respect to such taxpayer is in effect under paragraph (2)(A) or subsection (c)(2) with respect to an applicable entity for any taxable year of the taxpayer shall, in computing the taxpayer's tax liability under this chapter for such taxable year, take into account such taxpayer's share of any gain or loss reported under subsection (c)(1)(A)(i) or (c)(1)(B)(i) to the taxpayer for any taxable year of such entity ending with or within such taxable year of the taxpayer.
if a taxpayer fails to file a notice with any applicable entity as required under paragraph (2)(A), such taxpayer shall take into account, in computing the taxpayer's tax liability under this chapter for any taxable year for which such notice (or a related notice under subsection (c)(2)) would otherwise have been in effect, gain or loss described in subparagraph (A) which would have been reported if such notice had been filed.
such entity shall notify each other applicable entity in which such applicable taxpayer holds, by reason of holding a nontradable interest in such entity, a nontradable interest in such other entity
An applicable entity shall be required to report under subparagraph (A) to another applicable entity only if the applicable taxpayer is a significant owner (within the meaning of subsection (b)(4)) of such other entity, determined only by taking into account interests in such other entity which such applicable taxpayer holds by reason of its ownership interests in the entity otherwise required to report and such other ownership interests in such other entity as the Secretary may require to be taken into account to prevent the avoidance of the purposes of this part.
such entity shall be treated as an applicable taxpayer for purposes of applying sections 490(1) and 491 to such taxable event. Such an election shall be made at such time and in such manner as the Secretary may prescribe and, once made, shall be irrevocable without the consent of the Secretary.
Gifts, transfers at death and transfers into trusts by covered individuals or specified entities would generally be treated as sales at market value. Losses on gifts and trust transfers would not be immediately recognized, but could reduce a recipient’s later taxable gain. Special rules would also trigger transfers when ownership treatment of certain trusts ends, assets leave those trusts for someone other than the owner, assets cease to be included in the owner’s estate, or the owner dies.
If any person described in paragraph (3) transfers any covered asset by gift, upon death, or in trust, such covered asset shall be treated as sold by such person for its fair market value to the transferee on the date of such gift, death, or transfer.
(A) an individual who is an applicable taxpayer for the taxable year in which the transfer is made, or (B) an applicable entity with respect to which a notice received by the entity under subsection (b)(2)(A) or (c)(2) of section 493 is in effect at the time of such transfer.
No loss shall be recognized with respect to any covered asset which is treated as sold under subsection (a) by reason of a transfer by gift or in trust.
such gain shall be recognized only to the extent that it exceeds so much of such loss as is properly allocable to the covered asset sold or otherwise disposed of by the transferee.
(i) the owner ceases to be treated as the owner under this chapter, (ii) such property is distributed to any person other than the owner, or (iii) the property would no longer be included in the owner’s gross estate under chapter 11, or (B) on the date of the death of the owner.
Exceptions to the deemed-sale rule would cover specified spousal and divorce transfers, charitable transfers, qualified disability trusts and cemetery perpetual-care funds. The spousal exception would be restricted where the spouse or surviving spouse of the decedent is neither a U.S. citizen nor a qualifying long-term resident. For transfers subject to the rule, the recipient’s tax basis—the amount used to calculate later gain or loss—would generally be market value, subject to a special death-transfer rule.
Subsection (a) shall not apply to any transfer if such transfer— (i) is— (I) made to the spouse or the surviving spouse of the transferor, or (II) made to a former spouse of the transferor if the transfer is incident to divorce, or (ii) is a transfer of qualified terminable interest property or of property to which section 2056(b)(5) or 2523(e) applies.
Subparagraph (A) shall not apply if the spouse or surviving spouse of the decedent is not a citizen or long-term resident of the United States.
Subsection (a) shall not apply to any transfer if such transfer is made to or for the use of an organization described in section 170(c).
Subsection (a) shall not apply to transfers to any qualified disability trust (as defined in section 642(b)(2)(C)(ii)) or to transfers to any cemetery perpetual care fund described in section 642(i).
to the extent that subsection (a) applies to any transfer of property— (A) except as provided in subparagraph (B), the basis of the property in the hands of the transferee shall be the fair market value of the property
in the case such transfer is a transfer upon death to any individual described in subsection (c)(1)(A)(i), the basis of the property in the hands of the transferee shall be the same as it would be in the hands of the transferor
Newly covered taxpayers could elect to pay the defined first-year annual-valuation tax in five equal annual installments. They could also elect first-year tradable-asset treatment for eligible nontradable assets; the specified value generally could not be below tax basis. For a nontradable interest in an applicable entity, that election would require significant-owner status and an effective notice for the election year. Selling or transferring an affected asset would accelerate a proportionate unpaid amount. Death, bankruptcy or specified failure to pay would accelerate all remaining installments.
the net first-year tax liability of the taxpayer for such taxable year shall be payable in 5 equal annual installments over the 5-taxable-year period beginning with such taxable year.
such taxpayer’s net income tax for such taxable year determined without regard to gain or loss of the taxpayer taken into account for such taxable year by reason of a taxable event described in section 491(b)(1).
a taxpayer may elect to treat any nontradable covered asset held by the taxpayer as of the end of the first taxable year described in paragraph (1) as a tradable covered asset
such value may not, unless otherwise provided by the Secretary, be less than the taxpayer's adjusted basis in such asset
In the case of a nontradable covered asset which is a nontradable interest in an applicable entity, an applicable taxpayer may make an election under subparagraph (A) with respect to such asset only if such taxpayer is a significant owner (as defined in section 493(b)(4)(A)) of such entity with respect to whom a notice is in effect under section 493(b)(2)(A) for the taxable year for which the election is being made.
the applicable percentage of the unpaid portion of all remaining installments described in paragraph (1)(B) shall be due on the date of such disposition
In the case of an addition to tax for failure to timely pay any installment required under this subsection, the death of the taxpayer, or the filing of a petition by the taxpayer in a title 11 or similar case, then the unpaid portion of all remaining installments shall be due on the date of such event (or in the case of a title 11 or similar case, the day before the petition is filed).
A special election would allow qualifying taxpayers other than estates or trusts to treat up to $1 billion of otherwise tradable stock as nontradable. It would be limited to one class of stock in one C corporation. As written, eligibility requires the taxpayer’s first covered tax year to begin before January 1, 2025, a condition whose operation is uncertain alongside the section’s later effective date.
any stock held by such qualified taxpayer which would (but for such election) be a tradable covered asset and which is specified in such election shall be treated as a nontradable capital asset
may not specify stock in more than one C corporation or specify more than one class of stock in such corporation.
The aggregate value of stock specified in an election made under this subsection shall not exceed $1,000,000,000.
(A) which is not an estate or trust, and (B) for which the first taxable year for which such taxpayer is an applicable taxpayer is a taxable year that begins before January 1, 2025.
The amendments made by this section shall apply to taxable events and applicable transfers occurring in taxable years beginning after December 31, 2025.
Treasury would issue rules to prevent avoidance and coordinate the new asset rules with other provisions that tax income before payment. Section 201 would apply to taxable events and qualifying transfers in tax years beginning after December 31, 2025.
The Secretary shall issue such regulations or other guidance as are necessary to— (1) prevent taxpayers from avoiding the application of this part, and (2) coordinate the provisions of this part with other provisions of this title which require taxpayers to take income into account in the absence of a payment or other distribution.
The amendments made by this section shall apply to taxable events and applicable transfers occurring in taxable years beginning after December 31, 2025.
Section 202 would let covered taxpayers elect to apply qualifying annual-valuation losses against gains in the three preceding tax years, starting with the earliest year. The amount used in a prior year could not exceed that year’s qualifying gains or create or increase a net operating loss. Losses from the optional first-year treatment of nontradable assets would be excluded. The provision would apply to loss years beginning after December 31, 2025.
If an applicable taxpayer elects to have this subsection apply to any taxable year in which the taxpayer has a net marked-to-market loss
shall be a carryback to each of the 3 taxable years preceding the loss year
The entire amount of the net marked-to-market loss for any loss year shall be carried to the earliest of the taxable years to which such loss may be carried back
(A) such amount does not exceed the net marked-to-market gain for such prior year, and (B) the allowance of such carryback does not increase or produce a net operating loss (as defined in section 172(c)) for such year.
Such terms shall not include gains and losses from nontradable covered assets which are treated as tradable covered assets (and to which section 491 applies) by reason of an election under section 496(a)(3).
The amendment made by this section shall apply to loss years beginning after December 31, 2025.
Section 301 would remove the adjusted-gross-income limit from the net investment income tax calculation for covered taxpayers. It would instead use the existing statutory rate multiplied by the referenced investment-income amount for individuals or estates and trusts. The change would apply to tax years beginning after December 31, 2025; the referenced rates and income definitions are not reproduced.
No adjusted gross income limit for applicable taxpayers
the tax under this subsection for such taxable year shall be equal to the product of— (A) in the case of an individual, the rate of tax in effect under paragraph (1) multiplied by the amount determined under paragraph (1)(A), and (B) in the case of an estate or trust, the rate of tax in effect under paragraph (2) multiplied by the amount determined under paragraph (2)(A).
The amendment made by this section shall apply to taxable years beginning after December 31, 2025.
Certain people classified by existing law as covered expatriates would remain covered for ten tax years beginning with expatriation, without an early exit. An additional entry test would look for income exceeding $50 million or assets exceeding $500 million in any of the five preceding years. Section 302 would bar the election under section 877A(b) for property treated as sold, apply the referenced expatriate tax rules throughout the ten-year period, and treat remaining property not otherwise deemed sold as sold on the period’s final day. The underlying election and expatriate tax provisions are not reproduced. Section 302 would apply to tax years beginning after December 31, 2025.
such expatriate shall be treated as an applicable taxpayer during each of the taxable years during the 10-taxable-year period beginning with such taxable year (and such status shall not be terminated during such period by reason of any other provision of this part).
during any of the 5 taxable years immediately preceding the taxable year which includes the covered expatriate's expatriation date
substituting $50,000,000 for the dollar amount otherwise in effect for such taxable year under such paragraph, or (ii) the asset test of subsection (a)(3), except that such subsection shall be applied for purposes of this subparagraph by substituting $500,000,000
Section 877A is amended by redesignating subsection (i) as subsection (j) and by inserting after subsection (h) the following new subsection
no election may be made under subsection (b) with respect to any property treated as sold by reason of subsection (a)
treated as having sold on the last day of the 10-taxable-year period described in section 495(d)(2)(A) all property held by the covered expatriate as of the close of such day which is not otherwise treated as sold under part IV of subchapter E as of such time.
such individual shall be taxable as provided in such section for each of the taxable years in the 10-taxable-year period
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Section 311 would make section 1031(a), the referenced like-kind exchange provision, unavailable to an applicable entity while a specified covered-owner notice is in effect. This would apply to exchanges completed after December 31, 2025. The underlying exchange rules are not reproduced.
Treatment of like-kind exchanges by applicable entities
Section 1031 is amended by adding at the end the following new subsection
Subsection (a) shall not apply to an exchange by an applicable entity if a notice received by the entity under subsection (b)(2)(A) or (c)(2) of section 493 is in effect at the time of such exchange.
The amendment made by this section shall apply to exchanges completed after December 31, 2025.
Section 312 would make the referenced property-for-stock exchange provision unavailable to an applicable entity when an effective notice concerns a covered taxpayer with at least 20 percent ownership, using the specified ownership-attribution rules. This would apply to exchanges completed after December 31, 2025. The underlying exchange provision is not reproduced.
Treatment of transfers by applicable entities in exchange for stock
Subsection (a) shall not apply to an exchange by an applicable entity if an applicable notice received by the entity is in effect at the time of such exchange.
a notice— (i) which is received by the entity under subsection (b)(2)(A) or (c)(2) of section 493, and (ii) which relates to an applicable taxpayer who is a 20-percent owner with respect to such entity.
a 20-percent owner shall be determined in the same manner as a 5-percent owner under section 493(b)(4)(B), except that 20 percent shall be substituted for 5 percent
The amendments made by this section shall apply to exchanges completed after December 31, 2025.
Section 313 would make the referenced property-distribution rule mandatory for covered estates and trusts, while providing an election for other estates and trusts. It would expand the referenced trust-loan provisions to applicable trusts and change recipient language from U.S. persons to persons not exempt from income tax. It would also delete section 643(i)(2)(C) and add the new asset rules to the referenced multiple-trust provision. The general effective date would be tax years beginning after December 31, 2025; the underlying statutory rules, including the deleted paragraph, are not fully reproduced.
This paragraph shall apply to— (i) any distribution of property by an estate which is described in section 495(a)(1)(B)(ii) or by an applicable trust (as defined in section 495(c)), and (ii) any distribution during the taxable year of any other estate or trust which makes an election under this paragraph.
by inserting or an applicable trust (as defined in section 495(c)) after foreign trust in paragraph (1)
by striking who is a United States person in paragraph (1)(A) and inserting who is not exempt from tax under this chapter
by striking United States person in paragraph (1)(B) and inserting person (other than a person who is exempt from tax under this chapter)
(4) by striking paragraph (2)(C)
Section 643(f)(2) is amended by inserting or the rules of part IV of subchapter E after this chapter.
Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 2025.
Beneficiaries who include qualifying foreign-trust asset gains in income would owe a proportional delayed-tax charge calculated as though the trust were covered. The beneficiary charge would not apply to the extent the trust paid the specified tax itself. The bill would require information needed to calculate this charge and Treasury rules coordinating these changes with existing trust-tax provisions.
any beneficiary of an applicable foreign trust who is required to include in income any amount attributable to gain on an applicable transfer of any covered asset
the amount of tax imposed under this chapter shall be increased by the amount which bears the same ratio to the amount of the deferral recapture amount which would be determined on such applicable transfer under section 492(a)
(1) the amount required to be included in income attributable to the gain on such applicable transfer, bears to (2) the total amount of the gain on such applicable transfer.
Subsection (a) shall not apply to any amount to the extent that the applicable foreign trust pays
any foreign trust which would be an applicable trust if such trust were a domestic trust.
such information as the Secretary shall require for purposes of determining the increase (if any) in tax under section 686
shall provide such regulations or other guidance as necessary to coordinate the amendments made by this section with the rules of subpart D of part I of subchapter J.
Section 321 would add an interest-based charge when covered individuals include specified deferred compensation in income. The charge would use tax-underpayment interest rates plus one percentage point and could not exceed 10 percent of that compensation. The deferral period would generally begin when a legally binding right to compensation arises, with specified rules for property transfers and options. Taxable severance pay would instead face a separate 10 percent addition. Transfers of partnership profits interests would be excluded from the deferred-compensation definition.
the taxpayer's tax under this chapter for the taxable year (determined without regard to this section) shall be increased by an amount equal to the sum of— (1) the deferral recapture amount determined under subsection (b)(1) for any applicable deferred compensation which is includible in the gross income of the individual for the taxable year, and (2) 10 percent of the amount of any severance pay which is includible in the gross income of the individual during the taxable year.
by using the rates determined under section 6621(b) (plus 1 percentage point), and the method applicable under section 6621, for underpayments of tax for such period.
In no case shall the deferral recapture amount determined with respect to any applicable deferred compensation which is includible in gross income for a taxable year exceed an amount equal to 10 percent of the amount of such compensation.
Such term does not include— (i) severance pay, or (ii) any transfer of a profits interest in a partnership.
compensation shall be treated as first deferred as of the date the applicable taxpayer first has a legally binding right to the compensation or, in the case of property subject to section 83, the date of transfer of the property.
In the case of property acquired pursuant to an option described in section 83(e)(3), the deferral period shall begin on the date of grant of the option pursuant to which the property was acquired.
Payers of more than $5 million in specified deferred compensation or severance to an individual would have to file an information return by the following January 31 and provide a recipient statement. The reporting threshold would be inflation-adjusted after 2026, rounded down to a $250,000 increment. The bill would add these requirements to existing information-reporting penalty provisions. Section 321 would apply to tax years beginning after December 31, 2025. The reporting provision’s severance-definition cross-reference is inconsistent with the supplied definition, leaving its operation uncertain as written.
Every person making a payment to an individual in excess of $5,000,000 of— (1) any applicable deferred compensation described in section 409B(c)(2)(A), or (2) any severance pay (as defined in section 409B(d)(3)), shall make a return, not later than January 31 of the first calendar year beginning after the close of the taxable year during which such payment is includible in gross income of the individual.
Every person required to make a return under subsection (a) shall furnish to each individual with respect to whom such a return is required a written statement
In the case of any taxable year beginning after 2026, the $5,000,000 amount under subsection (a) shall be increased
If any amount as adjusted under paragraph (1) is not a multiple of $250,000, such amount shall be rounded to the next lowest multiple of $250,000.
(c) Penalties (1) Returns Section 6724(d)(1)(B)
(MM) section 6050AA(d) (relating to statements of information with respect to applicable deferred compensation).
The amendments made by this section shall apply to taxable years beginning after December 31, 2025.
(3) Severance pay The term severance pay means any compensation the payment or vesting of which is contingent, in whole or in part, upon the termination of employment or other services
(d) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.
Section 322 would change which existing tax rules apply to specified receipts from private-placement life insurance and annuity contracts held directly or indirectly by covered taxpayers, and to certain other insurance-related amounts involving covered taxpayers or related people. The bill defines private-placement contracts by required investor representations used for securities-registration exemptions. It would exclude receipts under specified older or qualified-plan contracts and education savings arrangements. These receipt rules would apply in tax years beginning after December 31, 2025.
if such amount is received on or after the annuity starting date, paragraph (2)(A) shall apply, and (ii) if such amount is received before the annuity starting date or is received with respect to a life insurance contract to which this section applies, the rules of clauses (i) and (ii) of paragraph (2)(B) shall apply.
any applicable taxpayer or any related person (as defined in section 144(a)(3)) to an applicable taxpayer shall be substituted for an individual
a private placement life insurance or annuity contract the holder of which (whether directly or indirectly) is an applicable taxpayer.
to make a representation that such owner— (I) has a specified minimum amount of income or assets, (II) has completed a specified minimum level of education, or (III) holds a specific license or credential.
Amounts under pre-1982 and qualified plan contracts, etc. excluded Such term shall not include amounts received— (I) under a contract which is described in paragraph (5)(B) or (5)(D), or (II) under a qualified tuition program (as defined in section 529(b)) or under a Coverdell education savings account (as defined in section 530(b)).
The amendments made by this subsection shall apply to amounts received in taxable years beginning after December 31, 2025.
Section 322 would extend the referenced 10 percent additional-tax provision to applicable private-placement life insurance and annuity contracts. It would also deny the referenced death-benefit exclusion for those contracts, while requiring protection for amounts previously included in income. Both changes would apply to amounts received in tax years beginning after December 31, 2025. The existing additional-tax exceptions are not reproduced.
10-Percent additional tax for distributions from applicable private placement life insurance or annuity contracts
by inserting or an applicable private placement life insurance or annuity contract (as defined in subsection (e)(12)) after a modified endowment contract (as defined in section 7702A) in paragraph (1)
Subsection (a)(1) shall not apply to amounts received by reason of the death of the insured under an applicable private placement life or annuity contract
The Secretary shall prescribe rules to ensure that paragraph (1) shall not apply to any portion of any amount received which was previously included in gross income.
The amendments made by this subsection shall apply to amounts received in taxable years beginning after December 31, 2025.
Insurance issuers and reinsurers would have to report recipients and aggregate applicable insurance or annuity amounts annually, and send recipient statements by January 31 of the following year. Treasury could require reporting by additional people. The bill would connect these duties to existing information-reporting penalty provisions, effective for tax years beginning after December 31, 2025.
Every person who issues a life insurance or annuity contract or who reinsures such a contract shall make an annual return
the name, address, and TIN of each person who receives an applicable amount
the aggregate applicable amounts received by each person identified in paragraph (2)
on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made.
including regulations or other guidance to require reporting under this section by such other persons as necessary
(xxx) section 6050BB(a) (relating to returns of information with respect to private placement life insurance and annuity contracts)
(NN) section 6050BB(b) (relating to statements of information with respect to private placement life insurance and annuity contracts).
The amendments made by this subsection shall apply to taxable years beginning after December 31, 2025.
Section 331 would deny covered taxpayers the referenced tax exclusion for gains from qualified small-business stock. Stock acquired before November 30, 2025 would be exempt from this new restriction. The amendment would apply to sales or exchanges on or after that date.
Treatment of exclusion for certain small business stock
This subsection shall not apply to any gain from the sale or exchange of qualified small business stock by an applicable taxpayer (as defined in section 495).
Subparagraph (A) shall not apply to any qualified small business stock acquired before November 30, 2025.
The amendment made by this subsection shall apply to sales or exchanges on or after November 30, 2025.
Section 332 would change the cutoff for the referenced qualified-opportunity-fund election to the earlier of December 31, 2026 or, for a covered taxpayer, the last day of the year before first becoming covered. A special hypothetical-2025 coverage test would substitute November 30, 2025. Applicable entities with an effective covered-owner notice could not make the election. The changes would apply to sales or exchanges after November 30, 2025 in tax years ending after that date.
with respect to any sale or exchange after the earlier of— (i) December 31, 2026, or (ii) in the case of an applicable taxpayer, the last day of the taxable year preceding the first taxable year for which the taxpayer is an applicable taxpayer.
No election may be made under paragraph (1) by an applicable entity with respect to any sale or exchange if a notice received by the entity under subsection (b)(2)(A) or (c)(2) of section 493 is in effect
a taxpayer which would be an applicable taxpayer for its first taxable year beginning in 2025 (determined as if part IV of subchapter E applied to taxable years beginning in 2025)
shall be applied by substituting November 30, 2025 for the date otherwise specified
The amendments made by this section shall apply to sales or exchanges after November 30, 2025, in taxable years ending after such date.
For the opportunity-fund rule covering investments held ten years, section 332 would replace the referenced valuation amount for taxpayers covered during any ownership year and for applicable entities. It would use the lower of sale-date market value and year-end market value for the year containing the later of the ten-year holding milestone or the specified coverage or notice date. For other taxpayers, the amended provision would use sale-date market value. Separately, section 201 would classify qualified-opportunity-fund investments as nontradable, generally subjecting covered taxpayers to transfer-based treatment rather than annual valuation. Eligible investments could nevertheless receive first-year annual-valuation treatment under the election for nontradable assets, subject to its conditions.
Modification of special rule for investments held 10 years
in the case of any taxpayer who is an applicable taxpayer for any taxable year during which such investment was held by the taxpayer or any taxpayer which is an applicable entity, the lesser of
the fair market value of such investment as of the last day of the taxable year which includes the later of— (i) the date that such investment has been held for 10 years, or (ii) in the case of— (I) an applicable taxpayer, the date that such taxpayer first became an applicable taxpayer, or (II) an applicable entity, the first date a notice was received by the entity under subsection (b)(2)(A) or (c)(2) of section 493
(B) the fair market value of such investment on the date that investment is sold or exchanged, and (2) in the case of any other taxpayer, the fair market value of such investment on the date the investment is sold or exchanged.
Notwithstanding subsection (b), any investment in a qualified opportunity fund (as defined in section 1400Z–2(d)) shall be treated as a nontradable covered asset.
if there is an applicable transfer by the taxpayer during the taxable year of any nontradable covered asset
Except as provided in subparagraph (C), a taxpayer may elect to treat any nontradable covered asset held by the taxpayer as of the end of the first taxable year described in paragraph (1) as a tradable covered asset for purposes of applying section 491(b)(1) and this subsection.
In the case of a nontradable covered asset which is a nontradable interest in an applicable entity, an applicable taxpayer may make an election under subparagraph (A) with respect to such asset only if such taxpayer is a significant owner (as defined in section 493(b)(4)(A)) of such entity with respect to whom a notice is in effect under section 493(b)(2)(A) for the taxable year for which the election is being made.
The supplied official-actions snapshot, updated October 6, 2026, records introduction in the House and referral to the House Committee on Ways and Means on September 14, 2026. This dated snapshot does not establish subsequent legislative action or enactment.
Source snapshot updated 2026-10-06T16:22:08Z. 2026-09-14: Referred to the House Committee on Ways and Means. 2026-09-14: Introduced in House
A closer look
Reviewed version: Introduced in House · 2026-09-14. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or appropriations policy rider was identified in the complete supplied introduced text. This conclusion does not establish absence in other versions or accompanying materials.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for a particular recipient or place was identified in the complete supplied introduced text. This conclusion is limited to that version and does not determine formal earmark status in absent accompanying materials.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
Findings to examine
The supplied text contains narrow exceptions and special treatment within the proposed tax rules. Their identification does not establish improper purpose or unjustified treatment.
The special stock election would let a qualifying taxpayer other than an estate or trust move up to $1 billion of one class of one corporation’s stock out of annual tradable-asset treatment. This is a narrow exception to the main annual-tax policy, but the requirement for a first covered year beginning before January 1, 2025 makes its practical availability uncertain.
any stock held by such qualified taxpayer which would (but for such election) be a tradable covered asset and which is specified in such election shall be treated as a nontradable capital asset
may not specify stock in more than one C corporation or specify more than one class of stock in such corporation.
The aggregate value of stock specified in an election made under this subsection shall not exceed $1,000,000,000.
(A) which is not an estate or trust, and (B) for which the first taxable year for which such taxpayer is an applicable taxpayer is a taxable year that begins before January 1, 2025.
The amendments made by this section shall apply to taxable events and applicable transfers occurring in taxable years beginning after December 31, 2025.
Specified trust categories would be exempt from covered-trust status, including qualified disability trusts, cemetery perpetual-care funds and settlement trusts. Transfers to qualified disability trusts and cemetery perpetual-care funds would also avoid the new deemed-sale rule. These are category-specific exemptions from the bill’s main trust and transfer-tax rules.
Such term shall not include— (A) a qualified disability trust (as defined in section 642(b)(2)(C)(ii)), (B) any portion of a trust which consists of property permanently set aside for the exclusive use of an organization described in section 170(c), (C) a pooled income fund (as defined in section 642(c)(5)) or a cemetery perpetual care fund (as described in section 642(i)), (D) a settlement trust (as defined in section 646), (E) any charitable remainder annuity trust (as defined in section 664), (F) any charitable remainder unitrust (as defined in section 664), or (G) any other category of trust identified in regulations or guidance provided by the Secretary.
Subsection (a) shall not apply to transfers to any qualified disability trust (as defined in section 642(b)(2)(C)(ii)) or to transfers to any cemetery perpetual care fund described in section 642(i).
Covered individuals following divorce or separate maintenance could elect to leave coverage earlier if the next year’s income did not exceed $1 million and assets did not exceed $10 million. This is a special route out of the continuing-coverage rules for a defined group.
Earlier termination election of applicable taxpayer status for divorced individuals
an applicable taxpayer ceases to be a married individual by reason of a decree of divorce or separate maintenance issued during any taxable year
such taxpayer, for the first taxable year following the taxable year described in clause (i), does not meet either— (I) the income test of paragraph (2), except that such paragraph shall be applied for purposes of this subclause by substituting $1,000,000 for the dollar amount otherwise in effect for such taxpayer under such paragraph, or (II) the asset test of paragraph (3), except that such paragraph shall be applied for purposes of this subclause by substituting $10,000,000 for the dollar amount otherwise in effect for such taxpayer under such paragraph, then such taxpayer may elect, in such manner and form and at such time as the Secretary may prescribe, not to be treated as an applicable taxpayer beginning with such first taxable year.
Recipients of partnership profits interests would receive an explicit exemption from the new deferred-compensation definition. This excludes that form of compensation from the associated delayed-tax charge; it does not establish exemption from other taxes.
the deferral recapture amount determined under subsection (b)(1) for any applicable deferred compensation which is includible in the gross income of the individual for the taxable year
Such term does not include— (i) severance pay, or (ii) any transfer of a profits interest in a partnership.
Covered taxpayers holding qualified small-business stock acquired before November 30, 2025 would be protected from the bill’s new denial of the stock-gain exclusion. This grandfathering exception distinguishes older holdings from later acquisitions.
This subsection shall not apply to any gain from the sale or exchange of qualified small business stock by an applicable taxpayer (as defined in section 495).
Subparagraph (A) shall not apply to any qualified small business stock acquired before November 30, 2025.
Qualified-opportunity-fund investments would receive nontradable treatment even if they otherwise met the tradable-asset definition. They would also be excluded from the specified nontradable-to-tradable conversion trigger. This provides special tax-timing treatment for that investment category, alongside the bill’s separate restrictions on opportunity-fund tax provisions. Eligible investments could still receive first-year annual-valuation treatment through the election for nontradable assets, subject to its conditions.
Notwithstanding subsection (b), any investment in a qualified opportunity fund (as defined in section 1400Z–2(d)) shall be treated as a nontradable covered asset.
If a taxpayer holds a nontradable covered asset (other than an investment in a qualified opportunity fund (as defined in section 1400Z–2(d))) which, as part of a transaction or series of transactions, is converted to, or exchanged for, a tradable covered asset, such conversion or exchange shall be treated as a disregarded nonrecognition event if gain or loss (if any) on such conversion or exchange is, without regard to this part, not recognized under this chapter.
No election may be made under paragraph (1) by an applicable entity with respect to any sale or exchange if a notice received by the entity under subsection (b)(2)(A) or (c)(2) of section 493 is in effect at the time of such sale or exchange.
Except as provided in subparagraph (C), a taxpayer may elect to treat any nontradable covered asset held by the taxpayer as of the end of the first taxable year described in paragraph (1) as a tradable covered asset for purposes of applying section 491(b)(1) and this subsection.
In the case of a nontradable covered asset which is a nontradable interest in an applicable entity, an applicable taxpayer may make an election under subparagraph (A) with respect to such asset only if such taxpayer is a significant owner (as defined in section 493(b)(4)(A)) of such entity with respect to whom a notice is in effect under section 493(b)(2)(A) for the taxable year for which the election is being made.
Full text preserved for this analysis. Legislative record snapshot: Oct 6, 2026. How PlainBill uses AI