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CIVIC HERALD
HR 5427 · 119th Congress · HouseIn committee

Billionaires Income Tax Act

In plain language: This bill requires ultra-wealthy taxpayers to pay income tax annually on the rising value of their investment assets, ending the practice of deferring taxes until assets are sold or passed to heirs. It eliminates or restricts several tax shelters for high-net-worth individuals, including tax-free private placement life insurance, like-kind real estate exchanges, executive deferred pay arrangements, and capital gains exemptions for Opportunity Zones. To balance market swings, it allows these taxpayers to apply investment losses against taxable gains from the previous three years.

Provisional: our plain-language summary, pending review.

Provisionalunreviewed: impact, issue tags, provisions, stakeholders, summary
People affected—Not determinable from the text provided. The bill applies to 'applicable taxpayers' (high-wealth individuals, trusts, and estates) and payers distributing over $5,000,000 in deferred compensation or severance, but does not state population counts.
Fiscal magnitude—no CBO estimate published
Reach65provisional · pending reviewrigor: heuristic llm
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Issues

What this bill touches.

Overall tax level+58Tax distribution+68

The sign shows the bill's direction on each issue (+ toward, − away); the number is its magnitude. Color never encodes good or bad, and never party.

Who it affects

Who it helps · who it burdens.

Who it helps

  • High-wealth taxpayers with marked-to-market investment lossesAllows applicable high-wealth taxpayers with net marked-to-market losses on tradable assets to carry those losses back up to three preceding tax years to offset past marked-to-market capital gains (Sec. 102(a)).provisional

Who it burdens

  • Applicable high-wealth taxpayersApplies the 3.8 percent net investment income tax to all investment income regardless of adjusted gross income thresholds (Sec. 201(a)), imposes a surtax up to 10 percent on nonqualified deferred compensation and a 10 percent tax on severance pay (Sec. 221(a)), eliminates tax-free treatment for private placement life insurance and annuities (Sec. 222(a)-(c)), eliminates the qualified small business stock gain exclusion for newly acquired stock (Sec. 231(a)), and limits Opportunity Zone tax deferrals (Sec. 232(a)-(b)).provisional
  • High-wealth expatriatesBars deferral of exit taxes, treats all remaining property as sold after 10 years, and subjects expatriates to tax rules over that 10-year period (Sec. 202(a)).provisional
  • Covered high-wealth business entitiesProhibits like-kind exchanges to defer capital gains taxes on real estate (Sec. 211(a)), disallows tax-free transfers of property to corporations when linked to a 20 percent or greater high-wealth owner (Sec. 212(a)), and limits Opportunity Zone deferrals and basis step-ups (Sec. 232(a)-(b)).provisional
  • Covered trusts, estates, and foreign trust beneficiariesTreats in-kind property distributions as taxable sales and taxes trust loans as standard income (Sec. 213(a)-(c)), and imposes a deferral recapture tax on U.S. beneficiaries receiving income from foreign trusts holding untaxed covered assets (Sec. 213(d)).provisional
  • Employers and payers of large deferred compensation or severanceRequires employers and payers distributing more than $5 million in deferred compensation or severance pay to file annual information returns with the IRS and issue written tax statements to recipients (Sec. 221(b)).provisional
  • Life insurance companies and reinsurersRequires insurance companies and reinsurers to submit annual information returns to the IRS and furnish statements to recipients of payments under private placement life insurance and annuity contracts (Sec. 222(d)).provisional

Dollar-level funding (FEC sector totals) is coming in a later phase.

What it does

The provisions, in plain language.

  1. Applies the 3.8 percent net investment income tax to all investment income of applicable high-wealth individuals, estates, and trusts without regard to adjusted gross income thresholds, starting in 2026.

    Sec. 201(a)provisional

  2. Prohibits covered high-wealth business entities from using like-kind exchanges to defer capital gains taxes on real estate transactions completed after 2025.

    Sec. 211(a)provisional

  3. Treats in-kind property distributions from covered trusts and estates as taxable sales, subjects loans from these trusts to standard income tax, and applies anti-abuse rules to multiple trusts, starting in 2026.

    Sec. 213(a)-(c)provisional

  4. Imposes an interest-based recapture surtax of up to 10 percent on nonqualified deferred compensation and adds a 10 percent tax on severance pay received by applicable high-wealth taxpayers, starting in 2026.

    Sec. 221(a)provisional

  5. Eliminates tax-free death benefits, loans, and tax-deferred withdrawals for private placement life insurance and annuity contracts held directly or indirectly by applicable high-wealth taxpayers, starting in 2026.

    Sec. 222(a)-(c)provisional

  6. Denies the capital gains tax exclusion for qualified small business stock acquired on or after November 30, 2025, by applicable high-wealth taxpayers.

    Sec. 231(a)provisional

  7. Ends Opportunity Zone capital gains deferral when a taxpayer becomes subject to the high-wealth tax rules and limits the 10-year basis step-up for investments held by covered high-wealth taxpayers and entities, effective after November 30, 2025.

    Sec. 232(a)-(b)provisional

How your members of Congress line up

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Timeline

How it moved.

  1. Sep 17, 2025Referred to the House Committee on Ways and Means.
  2. Sep 17, 2025Introduced in House
  3. Sep 17, 2025Sponsor introductory remarks on measure. (CR H4397)
  4. Sep 17, 2025Introduced in House
  5. Sep 16, 2025Sponsor introductory remarks on measure. (CR E863)

The original text

Read it for yourself.

Read the original text →

Sources & provenance

Congress.govrefreshed 9 days ago

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