Millionaires Surtax Act
- Bill Number
- S. 4306
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-04-15: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-05-07T02:49:14Z
AI-Generated Summary
Millionaires Surtax Act (S. 4306)
Purpose
To impose an additional tax, called a surtax (an extra charge on top of regular income taxes), on very high-income individuals to increase federal tax revenue from wealthy taxpayers.
Key Provisions
- New Tax Rate and Thresholds:
- Applies a 10% surtax on modified adjusted gross income (MAGI, which is adjusted gross income minus certain investment interest deductions) exceeding $2,000,000 for married couples filing jointly or surviving spouses.
- For single filers, heads of household, or others not filing jointly: threshold is $1,000,000.
- Calculation of MAGI:
- Starts with adjusted gross income (total income minus specific deductions).
- For estates or trusts: follows special rules under current tax law (section 67(e)).
- Special Rules:
- Nonresident aliens: Only counts income taxed under specific U.S. rules (section 871(b)).
- U.S. citizens/residents abroad: Reduces thresholds by amounts excluded for foreign earned income (with adjustments for disallowed deductions).
- Charitable trusts: Fully exempt if devoted to public charity purposes.
- The surtax does not count as a regular income tax for calculating tax credits or the Alternative Minimum Tax (AMT, a parallel tax system to ensure high earners pay a minimum).
- Effective Date: Applies to tax years starting after December 31, 2026.
- Adds a new section (59B) and part (VIII) to the Internal Revenue Code; not treated as a rate change under existing law (section 15).
Significant Changes to Existing Law
- Introduces a brand-new surtax specifically targeting high earners, separate from standard income tax brackets.
- Excludes the surtax from affecting tax credits or AMT calculations, preserving certain taxpayer benefits.
- No changes to corporate taxes; applies only to non-corporate taxpayers (individuals, estates, trusts).
Potential Impacts
- Government Agencies: Increases tax revenue for the IRS and U.S. Treasury, potentially funding federal programs without broad tax hikes.
- Citizens: Raises taxes for individuals with MAGI over $1–2 million (roughly the top 0.5–1% of earners), but leaves lower/middle-income unaffected; may encourage tax planning around thresholds or foreign income exclusions.
- International Relations: Minor; adjustments for expats could affect U.S. competitiveness for global talent, but no direct foreign policy changes.
Main Stakeholders Affected
- High-income individuals (e.g., millionaires and billionaires, including professionals, executives, investors).
- Estates and trusts (with exceptions for charitable ones).
- IRS and Treasury Department (for enforcement and revenue collection).
- Taxpayers abroad (U.S. citizens/residents with foreign income).
Notable Legal, Constitutional, or Political Implications
- Legal: Relies on Congress's broad power to levy income taxes (16th Amendment); integrates cleanly with existing code without triggering rate-change rules.
- Constitutional: No apparent challenges, as it treats taxpayers equally within categories and exempts certain trusts.
- Political: Advances progressive taxation by targeting the wealthy; could spark debates on fairness, economic incentives, or capital flight, but bill is neutral in text. Referred to Senate Finance Committee for review.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (3)
Sen. Merkley, Jeff [D-OR], Sen. Luján, Ben Ray [D-NM], Sen. Gallego, Ruben [D-AZ]
Recent Actions
- 2026-04-15: Read twice and referred to the Committee on Finance.
- 2026-04-15: Introduced in Senate
Bill Versions
- Millionaires Surtax Act — issued 2026-04-15 — PDF (4 pages)