Estate & probate
Step-up in basis
A step-up in basis is the resetting of an inherited asset’s cost basis to its value at the owner’s death, which can eliminate the capital gains tax on all the growth that happened during the owner’s lifetime.
Also called stepped-up basis · basis adjustment at death
If someone bought an asset long ago and it appreciated substantially, selling it during their lifetime would trigger tax on that whole gain. An heir who inherits it and sells it shortly afterward may owe little or nothing, because their basis starts at the date-of-death value.
It is one of the few genuinely large tax advantages available to families, and it interacts directly with planning decisions: which assets to spend first, which to hold, which to gift during life and which deliberately not to.
What it does not do
The step-up does not apply to everything. Tax-deferred retirement accounts do not receive it. The income tax inside them survives the owner. And gifting an appreciated asset during your lifetime generally hands the recipient your original basis instead, which can turn a well-meant gift into an unnecessary tax bill.
This entry is a general explanation, not advice for your situation, and it deliberately avoids thresholds and figures, because those are the part most likely to be out of date. Reviewed August 27, 2026. If a decision turns on any of it, ring the office rather than relying on a page.
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From definition to your situation
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