I 
119TH CONGRESS 
1ST SESSION H. R. 5336 
To amend the Internal Revenue Code of 1986 to equalize treatment of 
capital gains and earned income. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 11, 2025 
Mrs. RAMIREZ (for herself, Ms. JAYAPAL, Mr. GARCI´A of Illinois, Ms. TLAIB, 
Ms. ANSARI, Ms. MCCOLLUM, Mr. THANEDAR, Ms. OMAR, Mr. DELUZIO, 
and Mrs. WATSON COLEMAN) introduced the following bill; which was re-
ferred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to equalize 
treatment of capital gains and earned income. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Equal Tax Act’’. 
SEC. 2. PREFERENTIAL RATES FOR DIVIDENDS AND CAP-
ITAL 
GAINS 
LIMITED 
TO 
INCOMES 
OF 
$1,000,000 OR LESS. 
(a) IN GENERAL.—Section 1(h) of the Internal Rev-
enue Code of 1986 is amended by inserting ‘‘on so much 
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of such gain as does not cause the taxable income of the 
taxpayer to exceed $1,000,000 (computed after taking 
into account all other taxable income of the taxpayer)’’ 
after ‘‘the tax imposed by this section for such taxable 
year’’. 
(b) TREATMENT OF QUALIFYING FAMILY FARM OR 
BUSINESS.—Section 1(h) of such Code, as amended by 
subsection (a), is further amended by inserting ‘‘and with-
out regard to gain realized from the transfer by gift or 
bequest of a qualifying family farm or business described 
in section 139J(c)’’ after ‘‘all other taxable income of the 
taxpayer’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SECTION 3. DEEMED REALIZATION OF CAPITAL GAINS AT 
TIME OF GIFT OR DEATH. 
(a) TREATMENT AS SALE.— 
(1) IN GENERAL.—Part IV of subchapter P of 
chapter 1 of the Internal Revenue Code of 1986 is 
amended by adding at the end the following new sec-
tion: 
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‘‘SEC. 1261. GAINS FROM CERTAIN PROPERTY TRANS-
FERRED BY GIFT OR UPON DEATH. 
‘‘(a) IN GENERAL.—Any property which is trans-
ferred by gift or at death shall be treated as sold for its 
fair market value on the date of such gift or death. 
‘‘(b) EXCEPTIONS.— 
‘‘(1) SPOUSE OR SURVIVING SPOUSE.—This sec-
tion shall not apply to a transfer of property to the 
spouse or surviving spouse of the transferor (or to 
a qualified spousal trust). 
‘‘(2) CERTAIN
TANGIBLE
PERSONAL
PROP-
ERTY.—In the case of tangible personal property, 
this section shall only apply to the following: 
‘‘(A) Property held in connection with a 
trade or business. 
‘‘(B) Property held for investment. 
‘‘(C) Collectibles (as defined in section 
408(m) (determined without regard to para-
graph (3) thereof)). 
‘‘(3) CHARITABLE CONTRIBUTIONS.—This sec-
tion shall not apply to any transfer to an organiza-
tion described in section 170(c). 
‘‘(c) SPECIAL RULES FOR TRUSTS.— 
‘‘(1) CERTAIN GRANTOR TRUSTS.—In the case 
of any property which— 
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‘‘(A) is held in a trust of which the grantor 
or another person is treated as the owner under 
subpart E of part I of subchapter J of chapter 
1, and 
‘‘(B) is includible in the gross estate of the 
grantor or such other person under chapter 11, 
such property shall be treated as transferred under 
subsection (a) when the grantor or such other per-
son ceases to be treated as the owner of such prop-
erty, or such property ceases to be includible in the 
gross estate of the grantor or such other person (in-
cluding by reason of the death of the grantor or 
such other person, or the distribution of such prop-
erty to a person other than the grantor or such 
other person). 
‘‘(2) OTHER TRUSTS.—In the case of any prop-
erty held in trust and not described in paragraph 
(1), such property shall be treated as transferred 
under subsection (a) upon the transfer of such prop-
erty to a trust. 
‘‘(3) TRANSFERS FROM AND MODIFICATIONS OF 
TRUSTS.—The Secretary may by regulation pre-
scribe such rules to treat the modification of the 
terms of a trust or the transfer or distribution of 
trust assets (including to another trust) as a trans-
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fer described in subsection (a) as are necessary or 
appropriate to prevent the avoidance of this section. 
‘‘(4) GENERATION-SKIPPING
TRUSTS.—At the 
end of each 30-year period for which any property 
is continuously held in trust (other than property de-
scribed in paragraph (1)), such property shall be 
treated as transferred pursuant to subsection (a). 
‘‘(5) QUALIFYING SPOUSAL TRUST.— 
‘‘(A) IN
GENERAL.—The property of a 
qualifying spousal trust shall be treated as 
transferred under subsection (a)— 
‘‘(i) upon the death of the spousal 
beneficiary, 
‘‘(ii) upon the distribution of such 
property from such trust to any person 
other than the spousal beneficiary, or 
‘‘(iii) at such time such property 
ceases to be held by a qualifying spousal 
trust. 
‘‘(B) QUALIFYING SPOUSAL TRUST.—For 
purposes of this section, a trust is a qualifying 
spousal trust if— 
‘‘(i) the sole beneficiary of such trust 
is the spouse, or surviving spouse of the 
transferor, or 
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‘‘(ii) such spouse or surviving spouse 
is the sole life tenant, or sole income bene-
ficiary, of such trust. 
‘‘(d) EXCLUSION OF CERTAIN GIFTS.—In the case 
of gifts (other than gifts of future interests in property) 
made to any person during the taxable year, so much of 
the dollar amount of such gifts to such person as does 
not exceed the amount in effect for the calendar year 
under section 2503(b) in which the taxable year begins 
shall not be taken into account under subsection (a) for 
such taxable year. Where there has been a transfer to any 
person of a present interest in property, the possibility 
that such interest may be diminished by the exercise of 
a power shall be disregarded in applying this subsection, 
if no part of such interest will at any time pass to any 
other person. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary to prevent the avoid-
ance of the purposes of this section.’’. 
(2) CLERICAL AMENDMENT.—The table of sec-
tions for part IV of subchapter P of chapter 1 of 
such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 1261. Gains from certain property transferred by gift or upon death.’’. 
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(b) COORDINATION
OF
RELATED
PARTY
LOSS 
RULES.—Section 267 of such Code is amended by adding 
at the end the following new subsection: 
‘‘(h) PROPERTY TREATED AS SOLD AT DEATH.— 
Subsection (a)(1) shall not apply to any property that is 
transferred at death and treated as sold under section 
1261.’’. 
(c) TREATMENT
OF BASIS
FOR GIFTS
AND BE-
QUESTS TO WHICH TAX APPLIES.— 
(1) ELIMINATION
OF
CARRYOVER
BASIS
FOR 
GIFTS.—Section 1015(a) of such Code is amended— 
(A) by striking ‘‘If the property’’ and in-
serting the following: 
‘‘(1) GIFTS BEFORE JANUARY 1, 2026.—If the 
property’’; 
(B) by inserting ‘‘, and before January 1, 
2026’’ after ‘‘after December 31, 1920’’; and 
(C) by adding at the end the following new 
paragraph: 
‘‘(2) GIFTS AFTER DECEMBER 31, 2025.—If the 
property was acquired by gift after December 31, 
2025, the basis shall be the fair market value of 
such property at the time of the gift.’’. 
(2) 
RULES
FOR
TRANSFERS
BETWEEN 
SPOUSES.— 
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(A) IN
GENERAL.—Section 1041(b) of 
such Code is amended to read as follows: 
‘‘(b) TRANSFEREE HAS TRANSFEROR’S BASIS.—In 
the case of any transfer of property described in sub-
section (a), the basis of the transferee in the property shall 
be the adjusted basis of the transferor.’’. 
(B) 
TRANSFERS
AT
DEATH.—Section 
1041(a) of such Code is amended by inserting 
‘‘(including at death)’’ after ‘‘transfer of prop-
erty’’. 
(C) CONFORMING AMENDMENTS.— 
(i) Section 1014 of such Code is 
amended by adding at the end the fol-
lowing new subsection: 
‘‘(g) 
PROPERTY
ACQUIRED
FROM
DECEDENT 
SPOUSE.—In the case of property which passes from the 
decedent to (or in trust for the benefit of) the decedent’s 
surviving spouse in a transfer described in section 
1041(a)(1), the basis of such property in the hands of the 
transferee shall be determined under section 1041(b) and 
not this section.’’, and 
(ii) Section 1015(e) of such Code is 
amended by striking ‘‘1041(b)(2)’’ and in-
serting ‘‘1041(b)’’. 
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(3) BASIS MUST BE CONSISTENT WITH GAINS 
RECOGNIZED IN DEEMED REALIZATION.— 
(A) PROPERTY
ACQUIRED
FROM
DECE-
DENT.—Section 1014 of such Code, as amend-
ed by the preceding provisions of this Act, is 
amended by adding at the end the following 
new subsection: 
‘‘(h) BASIS MUST BE CONSISTENT WITH GAINS 
RECOGNIZED IN DEEMED REALIZATION.—The basis of 
any property to which subsection (a) applies shall not ex-
ceed the amount for which the property was treated as 
sold under section 1261.’’. 
(B) PROPERTY ACQUIRED BY GIFT.—Sec-
tion 1015 of such Code is amended by adding 
at the end the following new subsection: 
‘‘(f) BASIS MUST BE CONSISTENT WITH GAINS REC-
OGNIZED IN DEEMED REALIZATION.—The basis of any 
property to which subsection (a)(2) applies shall not ex-
ceed the amount for which the property was treated as 
sold under section 1261.’’. 
(d) CONFORMING AMENDMENTS.— 
(1) Section 7477(a) of such Code is amended 
by striking ‘‘chapter 12’’ and inserting ‘‘chapter 1 or 
12’’. 
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(2) Section 7517(a) of such Code is amended 
by striking ‘‘chapter 11’’ and inserting ‘‘chapter 1, 
11’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers by gift, or at death 
by decedents dying, after December 31, 2025. 
SEC. 4. EXCLUSION OF CERTAIN AMOUNTS OF REALIZED 
CAPITAL GAIN. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 139J. EXCLUSION OF GAIN FROM TRANSFERS OF AP-
PRECIATED ASSETS AT DEATH. 
‘‘(a) IN GENERAL.—Gross income shall not include— 
‘‘(1) so much of the net capital gain for the 
taxable year from transfers at death to which 
1261(a) applies as does not exceed $1,000,000, and 
‘‘(2) in the case of property that is a qualifying 
family farm or business that meets the certification 
requirement of subsection (d), 50 percent of so 
much of any gain from a transfer described in para-
graph (1) as exceeds $1,000,000. 
‘‘(b) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of any taxable 
year beginning after 2026, the $1,000,000 amounts 
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in subsection (a) shall be increased by an amount 
equal to— 
‘‘(A) such dollar amount, multiplied by 
‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for the calendar 
year in which the taxable year begins, deter-
mined by substituting in subparagraph (A)(ii) 
thereof ‘calendar year 2025’ for ‘calendar year 
2016’. 
‘‘(2) ROUNDING.—If the dollar amount in sub-
section (a), after being increased under paragraph 
(1), is not a multiple of $10,000, such amount shall 
be rounded to the next lowest multiple of $10,000. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFYING
FAMILY
FARM
OR
BUSI-
NESS.—The term ‘qualifying family farm or busi-
ness’ means real property located in the United 
States if during periods aggregating 3 years or more 
of the 5-year period ending on the date of the be-
quest of such real property, such real property was 
used as a farm for farming purposes or a family 
business. 
‘‘(2) OTHER DEFINITIONS.—The terms ‘farm’ 
and ‘farming purposes’, and ‘material participation’ 
have the respective meanings given such terms by 
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chapter for such taxable year shall be increased by 
an amount equal to the product of— 
‘‘(A) the amount determined by dividing— 
‘‘(i) the amount of gain excluded from 
gross income of the taxpayer under sub-
section (a)(2) on the date such property 
was transferred to the taxpayer, over 
‘‘(ii) 120, and 
‘‘(B) the number of full months remaining 
in the 120-month term described in subsection 
(d) as of the date of such recapture event. 
‘‘(2) RECAPTURE EVENT DEFINED.—For pur-
poses of this subsection, the term ‘recapture event’ 
means— 
‘‘(A) CESSATION
OF
OPERATION.—The 
cessation of the operation of any property the 
sale or exchange of which to the taxpayer is de-
scribed in subsection (a) as a qualifying family 
farm or business. 
‘‘(B) CHANGE IN OWNERSHIP.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), the disposition of a 
taxpayer’s interest in any property the sale 
or exchange of which to the taxpayer is de-
scribed in subsection (a). 
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‘‘(ii) AGREEMENT TO ASSUME RECAP-
TURE
LIABILITY.—Clause (i) shall not 
apply if the person acquiring such interest 
in the property agrees in writing to assume 
the recapture liability of the person dis-
posing of such interest in effect imme-
diately before such disposition. In the 
event of such an assumption, the person 
acquiring the interest in the property shall 
be treated as the taxpayer for purposes of 
assessing any recapture liability (computed 
as if there had been no change in owner-
ship). 
‘‘(3) SPECIAL RULES.— 
‘‘(A) NO CREDITS AGAINST TAX.—Any in-
crease in tax under this subsection shall not be 
treated as a tax imposed by this chapter for 
purposes of determining the amount of any 
credit under subpart A, B, or D of part IV of 
subchapter A. 
‘‘(B) NO
RECAPTURE
BY
REASON
OF 
HARDSHIP.—The increase in tax under this 
subsection shall not apply to any disposition of 
property or cessation of the operation of any 
property as a farm for farming purposes by rea-
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son of any hardship as determined by the Sec-
retary.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code 
is amended by inserting after the item relating to section 
139I the following new item: 
‘‘Sec. 139J. Exclusion of gain from transfers of appreciated assets at death.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers at death by decedents 
dying after December 31, 2025, in taxable years beginning 
after such date. 
SEC. 5. INFORMATION REPORTING OF CERTAIN GIFTS. 
(a) IN GENERAL.—Subpart B of part III of sub-
chapter A of chapter 61 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 6050Z. RETURNS RELATING TO CERTAIN GIFTS AND 
BEQUESTS. 
‘‘(a) IN GENERAL.—In the case of an applicable 
transfer, the individual making such gift, or the executor 
in the case of a transfer at death, shall furnish to the 
Secretary the following information: 
‘‘(1) The name and taxpayer identification 
number of the person to whom such transfer was 
made. 
‘‘(2) A description of the property transferred. 
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‘‘(3) The fair market value of the property 
transferred and the basis of such property to the 
transferee. 
‘‘(b) APPLICABLE TRANSFER.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘applicable transfer’ means— 
‘‘(A) any gift (other than a covered secu-
rity (as defined in section 6045(g)(3))) which is 
taken into account under section 1261, and 
‘‘(B) so much of any transfer at death 
(other than such a covered security) which is so 
taken into account under section 1261 and the 
gain from which is includible in gross income 
for the taxable year of such transfer. 
‘‘(2) DE MINIMIS.— 
‘‘(A) GIFTS.—For gifts exceeding the limi-
tation for such year under section 2503(b) and 
not taken into account under section 1261, see 
subsection (d) thereof. 
‘‘(B) TRANSFERS AT DEATH.—For amount 
of gain excluded from gross income in case of 
a transfer at death, see section 139J(a). 
‘‘(c) STATEMENTS TO BE FURNISHED TO PERSONS 
WITH RESPECT TO WHOM INFORMATION IS REQUIRED.— 
Every person required to make a return under subsection 
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(a) shall furnish to each person whose name is required 
to set forth in such return a written statement showing 
the information described in subsection (a). 
‘‘(d) TIMING.—The returns and statements required 
under this section shall be furnished at such time and in 
such form and manner as the Secretary shall by regulation 
prescribe.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part III of subchapter A of chapter 61 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 6050Z. Returns relating to certain gifts.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to transfers after December 31, 
2025, in taxable years beginning after such date. 
SEC. 6. EXTENSION OF TIME FOR PAYMENT OF TAX. 
(a) EXTENSION OF TIME.— 
(1) IN GENERAL.—Subchapter B of chapter 62 
of the Internal Revenue Code of 1986 is amended by 
adding at the end the following new section: 
‘‘SEC. 6168. EXTENSION OF TIME FOR PAYMENT OF CAP-
ITAL GAINS ON CERTAIN ASSETS REALIZED 
BY REASON OF DEATH. 
‘‘(a) 5-YEAR INSTALLMENT PAYMENT.— 
‘‘(1) IN GENERAL.—In the case of any gain 
with respect to eligible property that is recognized 
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