Billionaires Income Tax Act

Fairer Tax System: The bill requires high-income and high-net-worth taxpayers to pay taxes on an annual basis, similar to how working people pay taxes on wages (Section 2).

Closing Wealth Loopholes: It eliminates the ability of the ultra-wealthy to hold appreciating assets and borrow against them tax-free to fund their lifestyles (Section 2).

Preventing Intergenerational Tax Avoidance: The bill closes the loophole that allows wealthy taxpayers to pass untaxed appreciated assets to heirs who can then sell them tax-free (Section 2).

Taxing Expatriates: It implements special rules for covered expatriates who are applicable taxpayers, ensuring they remain taxable for a 10-year period following their expatriation date (Section 202).

Information Transparency: Under section 6050CC(b), people receiving amounts from private placement life insurance and annuity contracts must be provided with a written statement by January 31 of the following year, ensuring they have necessary documentation.

Increased Tax Burden for High-Net-Worth Individuals: "Applicable taxpayers" (those meeting specific income or asset tests) will face higher annual tax liabilities due to the elimination of tax deferrals (Section 490).

Additional Penalties on Compensation: Applicable taxpayers will face a "deferral recapture amount" (interest) on deferred compensation and a 10% tax on severance pay (Section 409B).

Loss of Life Insurance Tax Benefits: The bill repeals the exclusion for death benefits for applicable private placement life or annuity contracts, meaning these payments may now be taxable (Section 222(c)).

Stricter Rules for Entities: Applicable entities may lose the ability to use like-kind exchanges (Section 211) or certain tax-free transfers in exchange for stock (Section 212).

Increased Penalties: Section 6724(d) is amended to include penalties for failing to follow the new return and statement requirements related to private placement life insurance and annuity contracts.

Loss of Tax Exclusion: Section 231 removes the tax exclusion for gains from the sale or exchange of qualified small business stock for "applicable taxpayers" for stock acquired on or after September 17, 2025.

Restrictions on Opportunity Fund Elections: Section 232(a) prevents "applicable taxpayers" and "applicable entities" from making certain elections regarding sales or exchanges in Qualified Opportunity Funds under specific conditions.

Reduced Basis Adjustments: Section 232(b) changes the basis calculation for Qualified Opportunity Fund investments held for 10 years for "applicable taxpayers" and "applicable entities," potentially limiting the fair market value used to determine the basis.