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S 2845

Billionaires Income Tax Act

119th Congress Introduced by Angela Alsobrooks and 17 co-sponsors

The Billionaires Income Tax Act requires billionaires to pay taxes on earned income immediately, eliminating deferrals, aiming to increase tax revenue and fairness.

Introduced in Senate
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WeVote Research Nonpartisan
Bill Summary · S 2845

Summary of the Billionaires Income Tax Act (S 2845)

Bill Number: S 2845
Introduced: September 17, 2025
Status: Introduced in Senate
Classification: Bill

Purpose of the Bill

The Billionaires Income Tax Act aims to reform the taxation of high-net-worth individuals, specifically targeting billionaires and applicable taxpayers. The intent is to eliminate tax deferral opportunities that allow wealthy individuals to postpone tax payments on certain income and investments, thereby increasing tax revenue and ensuring a fairer tax system.

Key Provisions

The bill is structured into several titles and sections, each addressing different aspects of tax treatment for applicable taxpayers:

Title I: Elimination of Deferral for Applicable Taxpayers

  • Sec. 101: Proposes the elimination of tax deferral for applicable taxpayers, requiring them to pay taxes on income as it is earned rather than deferring it.
  • Sec. 102: Allows for the carryback of capital losses that are attributable to mark-to-market rules, enabling taxpayers to offset future gains with past losses.

Title II: Application of Other Provisions to Applicable Taxpayers and Entities

  • Subtitle A - Individuals:

    • Sec. 201: States that applicable taxpayers are not eligible for the adjusted gross income limitation on the net investment tax.
    • Sec. 202: Addresses the treatment of covered expatriates, ensuring they are subject to specific tax rules.

  • Subtitle B - Rules for Applicable Entities and Trusts:

    • Sec. 211: Modifies the treatment of like-kind exchanges by applicable entities.
    • Sec. 212: Changes the treatment of transfers by applicable entities in exchange for stock.
    • Sec. 213: Establishes special rules for applicable trusts.

  • Subtitle C - Treatment of Deferred Compensation and Certain Life Insurance and Annuity Contracts:

    • Sec. 221: Eliminates the deferral of tax on certain compensation for applicable taxpayers.
    • Sec. 222: Introduces rules regarding certain life insurance and annuity contracts held by applicable taxpayers.

  • Subtitle D - Repeal of Special Treatment for Certain Investments:

    • Sec. 231: Repeals the exclusion for certain small business stock from taxation.
    • Sec. 232: Modifies the rules for investments in qualified opportunity funds.

Impact of the Bill

The Billionaires Income Tax Act is expected to primarily affect high-net-worth individuals and entities classified as applicable taxpayers. By eliminating tax deferral options and modifying the treatment of various investment vehicles, the bill aims to increase tax liabilities for billionaires, thereby potentially raising significant revenue for the federal government.

Legislative Timeline

  • September 17, 2025: The bill was introduced in the Senate and read twice before being referred to the Committee on Finance for further consideration.

This summary provides an overview of the Billionaires Income Tax Act, highlighting its purpose, key provisions, and potential impact on taxpayers and the broader economy.

Compiled from official sources — confirm details with the bill’s official record.

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