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Death and taxes may be the only certainties in life, but death taxes are only a remote possibility for most people. The vast majority of Americans won’t ever have or give away enough to owe estate or gift taxes.

But far more people could be affected if a tax break that benefits heirs is eliminated. While campaigning for president, Joe Biden proposed doing away with something called the “step-up in basis” that allows people to minimize or avoid capital gains taxes on inherited assets.

No legislation has been proposed yet, and such a change could have a tough time getting approved by a divided Congress. But it’s worth knowing what the fuss is about.

“Right now, we’re telling folks to start thinking about this stuff, but we’re not rushing out to take action,” said certified financial planner Colleen Carcone, a director of wealth planning strategies at TIAA.

How step-up in basis lowers taxes

Although most estates don’t owe estate taxes, anyone who’s inherited a house, stock or other property has likely benefited from the step-up tax break that boosts the value of such assets to fair market value at the owner’s death.

Say your savvy aunt paid $7,000 for a single share of Berkshire Hathaway stock in 1990. That’s her tax basis. If she sold the stock for its closing price of $362,000 on Feb. 10, she would owe capital gains tax on the $355,000 gain. If she generously gave you the stock and you sold it on Feb. 10, you’d owe the same amount of tax because you’d also hold the stock at her tax basis.

Now, let’s say that instead of giving you the stock, she left it to you in her will and she died Feb. 10. The stock would get a new basis for tax purposes of $362,000 (its fair market value on that date). All the gain that occurred during her lifetime would never be taxed. If you sold the stock later, you would owe tax only on any gains that occurred after her death.

Some kinds of inheritances, such as annuities or retirement accounts, don’t get the step-up. But it’s no exaggeration to say that far more people benefit from our estate tax system — by inheriting homes and other assets with a stepped-up tax basis — than have to pay any estate taxes.

Who pays gift and estate taxes now

This year, an estate has to be worth more than $11.7 million to trigger federal estate taxes. Less than 0.1 percent of the people who died in the U.S. last year were expected to leave estates large enough to owe any tax, according to the Urban-Brookings Tax Policy Center.

People who have to pay gift taxes are pretty rare as well. There’s an annual exclusion, or an amount you can give away to as many people as you want each year without having to file a gift tax return.

The exclusion limit is $15,000 for 2021. That means you can give up to $15,000 each to an unlimited number of people without having to report the gifts.

Even if you do have to file a gift tax return, you wouldn’t actually owe gift taxes until the amount you gave away in your lifetime — over and above the annual exclusion amounts — totaled more than $11.7 million.

However, these historically high limits are scheduled to end in 2025. That means in 2026 the estate and gift tax exemption limits would revert to $5 million per person, adjusted for inflation. Biden wants the exemption to drop to $3.5 million per person.

People in some states already face lower limits. The 12 states that impose their own estate taxes — Connecticut, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, New York, Oregon, Rhode Island, Vermont and Washington — and the District of Columbia have lower exemption limits than the feds. [Maryland’s is currently $5 million; D.C.’s is $4 million.] Massachusetts and Oregon have the lowest exemption amounts, $1 million.

Six states — Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania — also levy taxes on people who inherit wealth.

Different tax rates and exemption limits apply, depending on the relationship between the inheritor and the person who died. Immediate family members usually pay the least, if anything, while distant relations and nonrelatives pay more.

For now, keep good records

The idea of eliminating the step-up in basis has been proposed in the past, but it faced headwinds in part because the practice benefits a wide range of voters.

Since there’s no concrete proposal to change the step-up, there’s not much people can do to prepare for change other than what they should be doing anyway, which is keeping careful records. That means “tracking the basis” of what they paid for any assets as part of routine estate planning.

If you buy shares of a stock in a taxable account, for example, hang onto records showing those purchases.

The cost of any improvements you make to a home or other real estate also can increase its tax basis and potentially reduce taxes later. So, keep those receipts as well.

“The one thing we do think folks should start doing today is really start to think about the record-keeping,” Carcone said.

—AP/NerdWallet