Ultra-Millionaire Tax Act of 2026
- Bill Number
- S. 4246
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-26: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-04-21T01:24:15Z
AI-Generated Summary
Purpose
The Ultra-Millionaire Tax Act of 2026 aims to impose an annual federal tax on the net value of assets held by ultra-wealthy individuals and certain trusts, targeting those with significant wealth to generate revenue and address wealth inequality.
Key Provisions
- Tax Imposition (Section 2901):
- Applies to individuals (married couples treated as one taxpayer) on the net value of taxable assets as of December 31 each year.
- Rate structure:
| Asset Value Range | Tax Rate | |--------------------------------|----------| | Up to $50 million (zero bracket threshold) | 0% | | $50 million to $1 billion (top bracket threshold) | 2% | | Over $1 billion | 3% (rises to 6% if Congress enacts universal health insurance prohibiting private duplicates) |
- Nongrantor multibeneficiary trusts (trusts with multiple beneficiaries, not controlled by one person, excluding certain retirement/charitable trusts) taxed as individuals, with brackets adjusted based on beneficiaries' unused amounts.
- Net Value of Taxable Assets (Section 2902):
- Fair market value of all property (real/personal, tangible/intangible, worldwide) minus debts.
- Exclusions: Items worth ≤$50,000 that are personal household goods (not business-use, collectibles, boats, vehicles, antiques, etc.).
- Attribution rules:
- Includes property in estates, recent gifts to minor family members, grantor trusts, and certain nongrantor trust transfers.
- Taxpayers can recover tax paid on attributed trust property from the trust.
- Treasury to issue valuation rules within 12 months, including formulas for hard-to-value assets (e.g., private companies).
- Special Rules (Section 2903):
- Deceased: Prorated tax for year of death; coordinates with estate tax.
- Non-residents/non-citizens: Only U.S.-situated property.
- Covered expatriates (high-net-worth renouncers of citizenship): 40% flat rate on pre-expatriation assets.
- Reporting and Enforcement (Sections 2904-2905):
- Mandatory asset reporting, integrated with existing forms (e.g., foreign accounts).
- IRS to audit ≥30% of taxpayers annually.
- New penalties: Up to 50% for gross valuation understatements (claimed value ≤40% of correct value; ≥65% triggers 30% penalty if >$5,000 underpayment).
- Payment extensions up to 5 years for liquidity hardship.
- Other Changes:
- Wealth tax not deductible from income taxes.
- Strengthens anti-avoidance rules for foreign entities and FATCA (Foreign Account Tax Compliance Act) enforcement.
- Authorizes $100 billion IRS funding (2027-2037): $70B enforcement, $10B services, $20B modernization.
- Biennial Treasury reports to Congress starting 2029.
- Effective for years after December 31, 2026.
Significant Changes to Existing Law
- New Wealth Tax Chapter: Adds Subtitle B-1 (Chapter 18) to Internal Revenue Code (IRC), introducing first federal annual wealth tax (unlike existing income/estate/gift taxes).
- Anti-Avoidance: Expands property attribution from trusts/gifts; treats certain trusts as taxpayers.
- Penalties/Enforcement: New "substantial wealth tax valuation understatement" penalties; mandates high audit rates and IRS funding.
- No Income Tax Offset: Explicitly nondeductible (amends IRC §275).
Potential Impacts
- Citizens: Ultra-wealthy (est. few thousand households) face new annual liability (e.g., $20M+ on $1B+ net worth at 2-3%), possibly prompting asset sales, trusts restructuring, or expatriation; liquidity extensions mitigate forced sales.
- Government Agencies: IRS gains massive funding boost for enforcement/modernization; increased workload for valuations/audits.
- International Relations: Targets U.S. assets of non-residents/expatriates; strengthens FATCA, potentially straining ties with tax havens but aligning with global wealth tax discussions.
Main Stakeholders Affected
- Primary: Individuals/families with >$50M net assets; beneficiaries of nongrantor multibeneficiary trusts.
- Secondary: Trusts (esp. family/wealth preservation vehicles), financial institutions (reporting burdens), IRS/Treasury (enforcement role).
- Indirect: Minor family gift recipients, expatriates, businesses (entity valuations).
Notable Legal, Constitutional, or Political Implications
- Legal: Relies on Treasury regulations for complex valuations/attribution; right of recovery from trusts could spark litigation; integrates with estate/gift taxes but prorates for deaths.
- Constitutional: As a direct tax on property, may face challenges under Article I, §9 (requiring apportionment by state population unless income tax); untested federally.
- Political: Ties higher rate to universal healthcare (incentive/condition); high IRS audits/funding could fuel debates on privacy/overreach vs. fairness.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (10)
Sen. Duckworth, Tammy [D-IL], Sen. Hirono, Mazie K. [D-HI], Sen. Markey, Edward J. [D-MA], Sen. Merkley, Jeff [D-OR], Sen. Schiff, Adam B. [D-CA], Sen. Smith, Tina [D-MN], Sen. Schatz, Brian [D-HI], Sen. Van Hollen, Chris [D-MD], Sen. Welch, Peter [D-VT], Sen. Whitehouse, Sheldon [D-RI]
Recent Actions
- 2026-03-26: Read twice and referred to the Committee on Finance.
- 2026-03-26: Introduced in Senate
Bill Versions
- Ultra-Millionaire Tax Act of 2026 — issued 2026-03-26 — PDF (22 pages)