What does Preamble of Fair Trusts for Fiscal Responsibility Act do?

This bill, formally titled 'To amend the Internal Revenue Code of 1986 to provide a tax on the assets of trusts, and for other purposes,' aims to modify the Internal Revenue Code of 1986.

What does SHORT TITLE. of Fair Trusts for Fiscal Responsibility Act do?

This bill is formally titled the Fair Trusts for Fiscal Responsibility Act.

What does IMPOSITION OF TAX ON ASSETS OF TRUSTS. of Fair Trusts for Fiscal Responsibility Act do?

This section imposes a tax on the net value of all assets of an applicable trust held on the last day of any calendar year. The tax imposed under this chapter on any applicable trust shall not exceed the excess of the product of the net value of all assets and the highest rate of tax, over the balance of the trust withholding credit account. The tax imposed by section 2901 shall be equal to the sum of specified percentages of the net value of all assets of the trust, based on bracket thresholds. Bracket thresholds are defined and adjusted for inflation, with specific rules for corporations, partnerships, and trusts. Information reporting requirements are established for applicable trusts and beneficiaries, including statements of net assets and allocation of unused bracket amounts.

What does COORDINATION WITH ESTATE AND GENERATION-SKIPPING AND ESTATE of Fair Trusts for Fiscal Responsibility Act do?

This section amends the Internal Revenue Code to address coordination between generation-skipping transfer taxes and estate taxes. It introduces new sections 2625 and 2604 within Subchapter C and A of chapter 13 to modify the taxable amount and provide a credit for previously paid trust asset taxes related to generation-skipping transfers. For estate taxes, it adds section 2047 to include the balance of a trust withholding credit account in the gross estate and section 2017 to allow a credit against the estate tax for previously paid trust asset taxes. It also amends sections 2103 and 2102 to address nonresident noncitizen estates. The amendments apply to transfers made in calendar years beginning after December 31, 2026, and decedents dying after that date.

What does PAYMENT OF TAXES OF GRANTOR TRUSTS. of Fair Trusts for Fiscal Responsibility Act do?

This section amends Section 2503 of the Internal Revenue Code of 1986 to address the payment of taxes by grantor trusts. It establishes that amounts paid by a 'deemed owner' of an 'applicable grantor trust' to satisfy taxes are treated as taxable gifts. An 'applicable grantor trust' is defined as a trust portion where the taxpayer is considered an owner and the trust is not fully revocable by the taxpayer. ‘Applicable taxes’ include taxes paid on income and the value of assets of the trust. Reimbursements from the trust to the deemed owner during the same calendar year are not subject to this gift treatment. The taxable gift is deemed to occur on December 31, the day before the deemed owner’s death, or when the owner renounces reimbursement rights. Sections 2522 and 2523 of the Internal Revenue Code are amended to deny deductions for payments treated as gifts under the revised Section 2503(d). The amendments apply to amounts paid or incurred after the date of enactment of this Act.

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Fair Trusts for Fiscal Responsibility Act

Last updated: 5/12/2026 · Introduced: 5/12/2026

Author: Patty Murray (D-WA)

TL;DR (AI)

This bill establishes a new tax on the net assets of applicable trusts, with tax rates determined by bracket thresholds adjusted for inflation.
The bill modifies estate and generation-skipping transfer tax rules by introducing new credits and adjustments to taxable amounts, impacting transfers made after 2026.
Payments made by grantor trusts to satisfy taxes are treated as taxable gifts to the deemed owner, and related deductions are denied.

119th Congressin committeeOfficial page

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Other Sections

Includes provisions on preamble, short title., and 3 more.

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