Ultra-Millionaire Tax Act of 2026
- Bill Number
- H.R. 8085
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-25: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-06-24T08:09:23Z
AI-Generated Summary
Purpose of the Legislation
The Ultra-Millionaire Tax Act of 2026 aims to introduce a new federal wealth tax on the net value of assets held by extremely wealthy individuals and certain trusts. This tax targets accumulated wealth rather than income, with the goal of generating revenue from high-net-worth taxpayers to support government functions, potentially including social programs like universal health care.
Key Provisions
- Tax Imposition (Section 2901): A tax applies annually to the net value of all taxable assets (property minus debts) as of December 31 for individuals meeting the thresholds. Rates are tiered:
- 0% on assets up to $50 million (zero bracket threshold).
- 2% on assets between $50 million and $1 billion (top bracket threshold).
- 3% on assets over $1 billion; this increases to 6% if Congress enacts a universal health insurance program that covers all U.S. residents and bans duplicate private coverage.
- Married couples (as defined under existing tax law) are treated as a single taxpayer.
- Taxable Assets (Section 2902): Includes all real or personal, tangible or intangible property worldwide, minus debts. Excludes:
- Items worth $50,000 or less that are personal (not business-related or collectibles like art, boats, or antiques that hold value).
- Attribution rules treat certain gifts to family under 18, grantor trusts (where the creator controls the trust), and portions of nongrantor trusts as the individual's assets to prevent avoidance.
- Special handling for charitable trusts and split-interest trusts (e.g., remainder interests in charitable remainder trusts are excluded).
- Nongrantor Multibeneficiary Trusts: Treated as separate taxpayers; beneficiaries can assign unused lower-rate brackets to the trust to reduce its tax.
- Valuation Rules: The Treasury Secretary must create methods within 12 months for valuing non-public assets (e.g., private companies), including formula-based approaches and discounts.
- Special Rules (Section 2903):
- For deceased individuals: Tax prorated to date of death; coordinates with estate taxes.
- Non-residents/non-citizens: Tax only on U.S.-situated assets.
- Covered expatriates (those renouncing citizenship to avoid taxes): 40% flat rate on assets as of expatriation date.
- Reporting and Enforcement (Sections 2904-2905): Requires detailed asset reporting, integrated with existing forms (e.g., foreign account reports). IRS must audit at least 30% of affected taxpayers annually.
- Payment and Penalties: Allows up to 5-year extensions for liquidity issues or business hardship. New penalties for valuation understatements (30% or 50% of underpayment if severe, with a $5,000 threshold).
- No Income Tax Deduction: Wealth tax payments cannot be deducted from income taxes.
- IRS Funding (Section 4): Authorizes $100 billion over 10 years ($70 billion for enforcement, $10 billion for taxpayer services, $20 billion for IT modernization).
- Disclosure Strengthening (Section 3): Enhances rules to prevent hiding assets in foreign entities; develops a plan using foreign account data (FATCA) for compliance.
The tax applies to calendar years starting after December 31, 2026. Biennial Treasury reports to Congress on administration begin in 2029.
Significant Changes to Existing Law
- Adds a new Chapter 18 and Subtitle B-1 to the Internal Revenue Code (IRC), creating the first ongoing federal wealth tax (distinct from one-time estate or gift taxes).
- Amends IRC Section 275 to bar deducting the wealth tax from income taxes.
- Expands IRC Section 6161 for payment extensions specific to wealth taxes.
- Adds IRC Section 6662(n) for wealth-specific accuracy penalties on asset valuations.
- Introduces IRC Section 7813 for dedicated IRS appropriations tied to this tax.
- Enhances foreign asset reporting under IRC Chapter 4 to target avoidance via offshore structures.
Potential Impacts
- On Citizens: Primarily affects ultra-wealthy individuals (those with over $50 million in assets), potentially reducing wealth inequality by taxing accumulated fortunes. Could encourage asset sales or shifts to lower-tax structures, but extensions mitigate forced liquidations. Broader taxpayers may benefit indirectly from increased IRS funding improving services and enforcement of all taxes.
- On Government Agencies: Boosts IRS resources for audits and modernization, enabling better overall tax administration. Generates new revenue (estimates not specified in bill) for federal spending, possibly funding health care if the 6% rate triggers.
- On International Relations: Taxes U.S. assets of non-residents, which could strain relations with countries hosting wealthy expatriates. High expatriate penalties may deter citizenship renunciation but invite challenges under tax treaties. Strengthened FATCA use promotes global transparency but risks backlash from foreign financial institutions.
Main Stakeholders Affected
- Ultra-Wealthy Individuals and Families: Primary taxpayers, including married couples and those using trusts; face new compliance burdens and potential tax on gifts or expatriation.
- Trusts and Beneficiaries: Nongrantor multibeneficiary trusts taxed separately; rules attribute assets back to creators or beneficiaries to close loopholes, affecting estate planners and philanthropists (charitable trusts partially exempt).
- Internal Revenue Service (IRS) and Treasury Department: Gains significant funding and regulatory authority for enforcement, valuation, and reporting; must conduct frequent audits.
- Financial Institutions and Businesses: Required to report on client assets, entity valuations, and foreign holdings, increasing administrative costs.
- Non-Residents and Expatriates: Limited to U.S. assets but face high rates, impacting international investors or former citizens.
Notable Legal, Constitutional, or Political Implications
- Legal: Introduces complex valuation challenges for illiquid assets, potentially leading to disputes and litigation over fair market value (e.g., using formulas or discounts). Attribution rules could be contested as overreaching into private trusts, and recovery rights from trusts add enforcement layers. Penalties emphasize accuracy, raising due process concerns for subjective valuations.
- Constitutional: As an annual tax on asset value (a form of direct tax), it may face challenges under Article I, Section 9 (requiring direct taxes to be apportioned by state population), though proponents might argue it's an excise tax on wealth. Applies uniformly but could be seen as targeting a class, inviting equal protection claims.
- Political: Represents a progressive shift toward taxing wealth over income, aligning with debates on economic inequality. The health care trigger ties it to broader policy goals, potentially polarizing Congress. Biennial reports ensure oversight, but high audit rates and funding could spark privacy or overreach concerns from affected groups.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Jayapal, Pramila [D-WA-7]
Cosponsors (49)
Rep. Boyle, Brendan F. [D-PA-2], Rep. Ansari, Yassamin [D-AZ-3], Rep. Beyer, Donald S. [D-VA-8], Rep. Chu, Judy [D-CA-28], Rep. Davis, Danny K. [D-IL-7], Rep. Dean, Madeleine [D-PA-4], Rep. Deluzio, Christopher R. [D-PA-17], Rep. DeSaulnier, Mark [D-CA-10], Rep. Foushee, Valerie P. [D-NC-4], Rep. Friedman, Laura [D-CA-30], Rep. Frost, Maxwell [D-FL-10], Rep. García, Jesús G. "Chuy" [D-IL-4], Rep. Garcia, Robert [D-CA-42], Rep. Goldman, Daniel S. [D-NY-10], Rep. Grijalva, Adelita S. [D-AZ-7], Rep. Ivey, Glenn [D-MD-4], Rep. Jackson, Jonathan L. [D-IL-1], Rep. Johnson, Henry C. "Hank" [D-GA-4], Rep. Kelly, Robin L. [D-IL-2], Rep. Lee, Summer L. [D-PA-12], Rep. McGovern, James P. [D-MA-2], Rep. Nadler, Jerrold [D-NY-12], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Ocasio-Cortez, Alexandria [D-NY-14], Rep. Omar, Ilhan [D-MN-5], Rep. Pallone, Frank [D-NJ-6], Rep. Pressley, Ayanna [D-MA-7], Rep. Ramirez, Delia C. [D-IL-3], Rep. Sánchez, Linda T. [D-CA-38], Rep. Schakowsky, Janice D. [D-IL-9], Rep. Simon, Lateefah [D-CA-12], Rep. Smith, Adam [D-WA-9], Rep. Stansbury, Melanie A. [D-NM-1], Rep. Takano, Mark [D-CA-39], Rep. Thanedar, Shri [D-MI-13], Rep. Tlaib, Rashida [D-MI-12], Rep. Tokuda, Jill N. [D-HI-2], Rep. Velázquez, Nydia M. [D-NY-7], Rep. Watson Coleman, Bonnie [D-NJ-12], Rep. Casar, Greg [D-TX-35], Rep. Waters, Maxine [D-CA-43], Rep. Evans, Dwight [D-PA-3], Rep. Meng, Grace [D-NY-6], Rep. Pingree, Chellie [D-ME-1], Rep. Mejia, Analilia [D-NJ-11], Rep. Khanna, Ro [D-CA-17], Rep. Leger Fernandez, Teresa [D-NM-3], Rep. Espaillat, Adriano [D-NY-13], Rep. Dexter, Maxine [D-OR-3]
Recent Actions
- 2026-03-25: Referred to the House Committee on Ways and Means.
- 2026-03-25: Introduced in House
- 2026-03-25: Introduced in House
Bill Versions
- Ultra-Millionaire Tax Act of 2026 — issued 2026-03-25 — PDF (23 pages)