Billionaires Income Tax Act
Sponsored By: Senator Ron Wyden
Introduced
Summary
Creates an annual tax regime for very wealthy individuals by treating many holdings as if sold each year to stop "buy, borrow, die" deferral. It would mark tradable assets to market, force tax on transfers of nontradable assets, and add wide reporting and anti‑avoidance rules for entities and trusts.
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Bill Overview
Analyzed Economic Effects
8 provisions identified: 0 benefits, 8 costs, 0 mixed.
Annual tax on tradable investments
If enacted, applicable taxpayers would have to treat tradable covered assets as if sold at fair market value each year and pay tax on gains. If you have a net marked‑to‑market loss, you could elect to carry it back up to three prior years, but carrybacks are limited. In your first year as an applicable taxpayer you could elect to treat some nontradable assets as tradable and pay the first‑year tax in five equal annual installments. The bill sets valuation rules for tradable and nontradable assets and gives the IRS authority to add methods to prevent avoidance.
Higher tax and reporting on big deferred pay
If enacted, applicable taxpayers would face a deferral recapture tax on deferred compensation and an extra 10% tax on severance pay included in income. The recapture uses past top rates, adds interest at the section 6621(b) rate plus 1 point, and is capped at 10% per item of compensation. Payers who make over $5,000,000 of applicable deferred compensation or severance to one person in a year would have to file an information return and give the worker a statement by January 31. The $5,000,000 threshold is inflation‑adjusted after 2026 and rounded to the next lower $250,000.
Net Investment Income Tax without AGI limit
If enacted, applicable taxpayers would be subject to the Net Investment Income Tax (NIIT) without using the usual adjusted gross income threshold. That means applicable taxpayers could owe NIIT on investment income even when AGI would normally shield them. This change would apply for taxable years after December 31, 2025.
Tax on gifts, trusts, and transfers
If enacted, many transfers by applicable taxpayers — including gifts, bequests, and transfers in trust — could be treated as sales at fair market value for tax purposes. Gifts and trust transfers generally would not show losses and transferee basis is usually set to the value at transfer. For transfers that avoid recognition, the bill can force a "deferral recapture amount" based on allocated past tax rates plus interest (section 6621(b) rate plus 1 point), subject to a statutory cap tied to 49 percent. The bill also limits some nonrecognition exchanges and coordinates special trust reporting and foreign trust beneficiary rules.
Taxes and reporting for private life contracts
If enacted, distributions from private placement life insurance or annuity contracts held by applicable taxpayers would be taxed under special rules and could face a 10% extra tax. Death benefits from those contracts would no longer be excluded from income for applicable taxpayers. Issuers and reinsurers of such contracts must file annual returns and give statements to recipients by January 31, and penalties apply for failures to file or furnish the statements. These rules apply to amounts received in taxable years after December 31, 2025.
Who becomes an applicable taxpayer
If enacted, you would be an "applicable taxpayer" only if in each of the past three taxable years you met either an income or asset test. The income test is adjusted gross income over $100 million ($50 million if married filing separately). The asset test is covered assets over $1 billion ($500 million if married filing separately). Certain trusts use lower tests: $10 million income or $100 million assets. Your status continues until the three-year lookback fails unless you timely elect not to be treated as applicable.
Limits on Opportunity Funds and small-business stock
If enacted, taxpayers who are (or ever were) applicable taxpayers could be barred from making Qualified Opportunity Fund elections for sales after September 17, 2025. The usual 10‑year basis step‑up for Opportunity Funds would be limited so your basis is the lesser of two fair market values, reducing the 10‑year benefit. The bill also disallows the section 1202 small‑business stock gain exclusion for applicable taxpayers for sales on or after September 17, 2025, except for stock bought before that date.
Tighter rules for covered expatriates
If enacted, a covered expatriate who is an applicable taxpayer could not make the normal post‑expatriation sale election. The person would be treated as if they sold certain property at the end of the 10‑year expatriation period and would be taxable for each year in that 10‑year period. This change applies for taxable years after December 31, 2025.
Sponsors & CoSponsors
Sponsor
Ron Wyden
OR • D
Cosponsors
Sheldon Whitehouse
RI • D
Sponsored 9/17/2025
Elizabeth Warren
MA • D
Sponsored 9/17/2025
Bernie Sanders
VT • I
Sponsored 9/17/2025
Tina Smith
MN • D
Sponsored 9/17/2025
Sen. Luján, Ben Ray [D-NM]
NM • D
Sponsored 9/17/2025
Peter Welch
VT • D
Sponsored 9/17/2025
Angela Alsobrooks
MD • D
Sponsored 9/17/2025
Tammy Baldwin
WI • D
Sponsored 9/17/2025
Richard Blumenthal
CT • D
Sponsored 9/17/2025
Tammy Duckworth
IL • D
Sponsored 9/17/2025
John Fetterman
PA • D
Sponsored 9/17/2025
Martin Heinrich
NM • D
Sponsored 9/17/2025
Mazie Hirono
HI • D
Sponsored 9/17/2025
Edward Markey
MA • D
Sponsored 9/17/2025
Jeff Merkley
OR • D
Sponsored 9/17/2025
Christopher Murphy
CT • D
Sponsored 9/17/2025
Patty Murray
WA • D
Sponsored 9/17/2025
John Reed
RI • D
Sponsored 9/17/2025
Brian Schatz
HI • D
Sponsored 9/17/2025
Chris Van Hollen
MD • D
Sponsored 9/17/2025
Adam Schiff
CA • D
Sponsored 9/30/2025
Roll Call Votes
No roll call votes available for this bill.
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