Step-Up in Basis Calculator

When an asset is inherited, its cost basis "steps up" (or down) to fair market value on the date of death. This eliminates all capital gains accrued during the decedent's lifetime - heirs only owe capital gains tax on appreciation AFTER inheritance. A $50,000 stock position bought decades ago worth $500,000 at death passes to heirs with a $500,000 basis; sold for $510,000, only $10,000 is taxable gain.

GET step-up: stocks, bonds, mutual funds, real estate, businesses, collectibles, crypto held outside retirement accounts. NO step-up: traditional IRAs, 401(k)s, annuities (these are "income in respect of decedent" - distributions remain ordinary income to heirs), savings bond accrued interest, installment-sale receivables. Roth IRAs technically get step-up but it's moot since distributions are tax-free anyway.

In community property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI, plus AK opt-in), both halves of community property get full step-up when one spouse dies - a powerful tax benefit. In common-law states, only the deceased spouse's half gets step-up; the survivor's half retains original basis. This makes community property a major basis-planning advantage for couples in those states.

It has been proposed multiple times (most recently the 2021 Biden Build Back Better proposal) and is a recurring tax-reform target because it represents ~$40 billion/yr in foregone revenue. As of 2026 step-up remains intact. Wealth planners hedge against potential repeal by accelerating low-basis asset sales pre-death or using grantor-trust strategies.