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For the 99.5 Percent Act
1/10/2024, 9:45 AM
Summary of Bill HR 2676
One of the key provisions of the For the 99.5 Percent Act is to lower the estate tax exemption from its current level of $11.7 million to $3.5 million for individuals and $7 million for couples. This means that estates valued above these thresholds would be subject to the estate tax, with rates ranging from 45% to 65%.
Additionally, the bill seeks to increase the top marginal estate tax rate from 40% to 65% for estates valued at over $1 billion. This change is aimed at ensuring that the wealthiest individuals pay their fair share in estate taxes. Furthermore, the For the 99.5 Percent Act includes provisions to close loopholes that allow wealthy individuals to avoid paying estate taxes through various strategies such as valuation discounts and grantor retained annuity trusts. Overall, the For the 99.5 Percent Act is a comprehensive piece of legislation that aims to address wealth inequality by reforming the estate tax system to ensure that the wealthiest individuals pay their fair share in taxes.
Congressional Summary of HR 2676
For the 99.5 Percent Act
This bill imposes increased tax rates on decedent estates, gifts, and generation-skipping transfers.
Estates with a value of over $1 billion are taxed at a 65% tax rate. The basic exclusion amount is reduced to $3.5 million.
The bill increases (1) to $3 million the reduction in valuations of farmland for estate tax purposes and adjusts such increased amount for inflation, and (2) to $2 million the maximum estate tax exclusion for contributions of conservation easements. It also increases to 60% the applicable percentage for such exclusion.
The bill requires (1) consistent basis reporting for property acquired by gift and transfers in trust, and (2) executors of estates and donors of gifts required to file a gift tax return to disclose to the Department of the Treasury, and to recipients of any interest in an estate or a gift, information identifying the value of each interest received.
The bill sets forth estate valuation rules for certain transfers of nonbusiness assets and limits estate tax discounts for certain individuals with minority interests in a business acquired from a decedent.
The bill expands rules for valuing assets in grantor retained annuity trusts to require that (1) the right to receive fixed amounts from an annuity last for a term of not less than 10 years and not more than the life expectancy of the annuitant plus 10 years, and that such fixed amounts not decrease during the first 10 years of the annuity term, and (2) the remainder interest have a value when transferred that is not less than the the greater of 25% of the fair market value of the trust property or $500,000. The bill also sets forth rules for the application of transfer taxes to a grantor trust (a trust in which the grantor retains control over the trust assets and has the right to receive income from the trust).
The bill modifies the tax exclusion for annual gifts to eliminate the present interest requirement for such exclusion and to impose a new, aggregate per donor limit equal to twice the annual exclusion amount in effect for the taxable year. It also provides for a gross up of taxable gifts in specified calendar years.
The bill defines executor for purposes of the Internal Revenue Code.
