What does Preamble of Equal Tax Act do?

This bill aims to amend the Internal Revenue Code of 1986 The amendment seeks to equalize treatment of capital gains and earned income

What does SHORT TITLE. of Equal Tax Act do?

This bill is formally titled the Equal Tax Act.

What does PREFERENTIAL RATES FOR DIVIDENDS AND CAPITAL GAINS LIMITED TO of Equal Tax Act do?

This section amends Section 1(h) of the Internal Revenue Code of 1986 It limits preferential rates for dividends and capital gains to incomes of $1,000,000 or less It provides special treatment for qualifying family farms or businesses The amendments apply to taxable years beginning after December 31, 2026

What does DEEMED REALIZATION OF CAPITAL GAINS AT TIME OF GIFT OR DEATH. of Equal Tax Act do?

This section amends the Internal Revenue Code to treat certain property transfers by gift or death as a sale for fair market value. Generally, any property transferred by gift or at death will be treated as sold for its fair market value on the date of the transfer. Exceptions exist for transfers to a spouse or surviving spouse (or qualified spousal trust), charitable contributions, and certain tangible personal property (held in connection with a trade or business, held for investment, or collectibles). Special rules apply to grantor trusts, trusts in general, and generation-skipping trusts regarding when the deemed sale occurs. Gifts up to a certain amount (as defined in section 2503(b)) are excluded from the deemed realization. The amendments affect the carryover basis for gifts before January 1, 2027, and establish a fair market value basis for gifts after December 31, 2026. The basis of property acquired from a decedent or by gift must be consistent with the gains recognized in the deemed realization.

What does EXCLUSION OF CERTAIN AMOUNTS OF REALIZED CAPITAL GAIN. of Equal Tax Act do?

This section amends the Internal Revenue Code of 1986 to establish a new section, 139M, regarding the exclusion of gain from transfers of appreciated assets at death. It generally excludes up to $1,000,000 of net capital gain from transfers at death from gross income. For qualifying family farms or businesses, 50 percent of gains exceeding $1,000,000 are also excluded. The $1,000,000 exclusion amount is subject to inflation adjustments beginning after 2027. A 'qualifying family farm or business' is defined as real property used for farming or as a family business for at least three years within a five-year period. The certification requirement mandates the property will be used as a farm or family business for at least 120 months. If a qualifying farm or business is sold or its operation ceases, a recapture event occurs, potentially increasing the taxpayer's tax liability. The amendments apply to transfers at death by decedents dying after December 31, 2026.

What does INFORMATION REPORTING OF CERTAIN GIFTS. of Equal Tax Act do?

This section amends the Internal Revenue Code of 1986 to add a new section requiring information reporting of certain gifts and bequests. The new section applies to applicable transfers, including gifts and transfers at death, which are taken into account under section 1261. Required information includes the name and taxpayer identification number of the transferee, a description of the property transferred, and its fair market value and basis. The returns and statements required under this section must be furnished at a time and in a form and manner prescribed by the Secretary. The amendments made by this section apply to transfers after December 31, 2026, in taxable years beginning after such date.

What does EXTENSION OF TIME FOR PAYMENT OF TAX. of Equal Tax Act do?

This section amends the Internal Revenue Code of 1986 to allow taxpayers to elect to pay capital gains tax resulting from the death of a taxpayer in installments over a period not exceeding five years. The election to pay in installments must be made by the time prescribed for filing the return of tax, including extensions. The eligible property for this installment payment option excludes personal property actively traded. If a deficiency is assessed, it will be prorated to the installments, subject to certain limitations. Interest on any unpaid portion of the tax will be paid annually at a rate of 45% of the annual rate, if the time for payment has been extended under this section. The period of assessment for tax imposed under section 1261 is extended when payment is extended under section 6168. These amendments apply to taxable years beginning after December 31, 2026.

What does LIMITATION ON USE OF LIKE-KIND EXCHANGES TO AVOID TAX ON REAL of Equal Tax Act do?

This section amends Section 1031(a) of the Internal Revenue Code of 1986 to limit the use of like-kind exchanges to avoid taxes on real estate gains. There is an annual limitation of $500,000 on the amount of gain excluded from recognition with respect to property that is not 'qualified property'. The aggregate amount of gain excluded from recognition over all taxable years is limited to $1,000,000. ’Qualified property’ includes property used for farming purposes or property exchanged for property that will serve the same specific purpose. The amendment applies to exchanges of real property after December 31, 2026.

What does LIMITATION ON DEDUCTION FOR QUALIFIED BUSINESS INCOME. of Equal Tax Act do?

This section amends Section 199A(a)(2) of the Internal Revenue Code of 1986. Subparagraph (A) is modified to limit the taxable income considered to $1,000,000. Subparagraph (B) is modified to define income as all income other than qualified business income. The amendment applies to taxable years beginning after December 31, 2026.

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Equal Tax Act

Last updated: 3/17/2026 · Introduced: 3/17/2026

Author: Edward Markey (D-MA)

TL;DR (AI)

This bill limits preferential tax rates on capital gains and dividends to incomes of $1,000,000 or less.
Transfers of property by gift or death will generally be treated as a sale for fair market value, with exceptions for transfers to spouses, charities, and certain personal property.
The bill excludes up to $1,000,000 of capital gains from transfers at death from gross income, with an additional exclusion for qualifying family farms or businesses.
Certain gifts and bequests will be subject to new information reporting requirements to the IRS.
Taxpayers can elect to pay capital gains tax resulting from the death of a taxpayer in installments over a period not exceeding five years.

119th Congressin committeeHR. 5336(In Committee)Official page

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Other Sections

Includes provisions on preamble, short title., and 7 more.

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