In March 2021, US Democratic Senators proposed to the US Senate two pieces of legislation that if enacted will revolutionise taxation of estates and gifts.

The For the 99.5% Act (the 99.5% Act) and the Sensible Taxation and Equity Promotion Act (the STEP Act), if passed with a majority vote, would be effective from 31 December 2021 and would include:

raising capital gains tax rate from 20% to 39%;
reducing the estate and generation-skipping transfer tax exemptions from USD11.7 million per person to USD3.5 million per person;
reducing the per-person gift tax exemption from USD11.7 million to USD1 million;
putting a 50 year limit on generation-skipping trusts and a generation-skipping transfer tax on existing generation-skipping trusts every 50 years;
increasing estate tax’s top rate from 40% to 45 – 65%;
limiting the annual gift tax exclusion amount to USD20,000 per donor and USD10,000 per donee for gifts to trusts, gifts of interests in pass through entities and other types of gifts.

The STEP Act will also have additional disclosure and IRS reporting requirements for trusts with assets amounting to more than USD1 million or gross income in excess of USD20,000.

SOURCE: sanders.senate.gov

SOURCE: vanhollen.senate.gov