Ultra-Millionaire Tax Act of 2026
- Sponsor
- Rep. Jayapal, Pramila [D-WA-7]
- Committees
- Ways and Means Committee (primary)
- Last action
- Mar 25, 2026
Bottom line
This bill establishes a new annual wealth tax on ultra-millionaires and billionaires, aiming to generate revenue and fund IRS enforcement and modernization, with a potential rate increase tied to universal healthcare legislation.
What it actually does
This bill amends the Internal Revenue Code of 1986 to establish an annual tax on the net value of taxable assets for individuals with wealth exceeding $50 million, with a higher rate for wealth over $1 billion. It includes specific rules for trusts, mandates the Secretary of the Treasury to establish asset valuation rules, and authorizes significant funding for the Internal Revenue Service (IRS) to implement and enforce the new tax.
Proponents argue
Supporters argue this bill directly addresses extreme wealth inequality, ensuring that the wealthiest individuals contribute their fair share to society and generate substantial revenue for public services. They contend it would curb the accumulation of dynastic wealth and provide critical funding for government functions, including a potential universal healthcare program, while strengthening the IRS's capacity.
Opponents contend
Opponents contend that a wealth tax is unconstitutional as a direct tax not apportioned among the states, and that it would be exceedingly difficult to implement due to complex asset valuation challenges. They argue it could lead to capital flight, discourage investment, and represents double taxation, ultimately failing to achieve its stated revenue goals and creating significant administrative burdens.
The bill is relatively short, and its core policy objectives are clear. However, the technical details regarding trust treatment, asset valuation, and enforcement mechanisms require careful reading and a degree of familiarity with tax law.
Section 2(a), new Chapter 18, Section 2901
Annual Tax on Net Value of Taxable Assets
This provision establishes an annual tax on the net value of an individual's taxable assets on the last day of any calendar year. It sets a 0% tax rate for assets up to $50 million, a 2% rate for assets between $50 million and $1 billion, and an 'applicable percentage' (initially 3%) for assets over $1 billion. Married individuals are treated as one taxpayer for the purpose of this tax.
Supporters argue
Proponents argue this progressive tax structure ensures that the wealthiest individuals, who have benefited most from economic growth, contribute proportionally to public services and reduce wealth inequality.
Critics contend
Opponents argue this tax is an unconstitutional direct tax not apportioned among the states, and that it unfairly targets successful individuals, potentially discouraging investment and leading to capital flight.
Tradeoffs
Balances the goal of wealth redistribution and increased public revenue against concerns about economic disincentives, constitutional challenges, and administrative complexity.
Section 2(a), new Chapter 18, Section 2901(c)
Increased Tax Rate for Universal Healthcare Legislation
This provision specifies that the top tax rate on wealth exceeding $1 billion will increase from 3% to 6% in any calendar year during which legislation establishing a comprehensive universal health insurance program for all U.S. residents, which prohibits private entities from providing duplicate benefits, is in effect.
Section 2(a), new Chapter 18, Sections 2901(e) and 2902(c)
Rules for Nongrantor Multibeneficiary Trusts and Other Trusts
The bill establishes specific rules for how trusts are treated under the wealth tax. Nongrantor multibeneficiary trusts are treated as individuals subject to the tax, with modified bracket thresholds based on beneficiary assignments. Property in grantor trusts is attributed to the grantor. Property in other nongrantor trusts (attributable to gratuitous transfers by a taxpayer or single-beneficiary trusts not from such transfers) is attributed to the individual or beneficiary, with a right of recovery for the tax paid.
Section 2(a), new Chapter 18, Section 2902(d)
Establishment of Valuation Rules
This provision mandates the Secretary of the Treasury to establish rules and methods for determining the value of any asset for purposes of this subtitle, particularly for assets that are not publicly traded or do not have a readily ascertainable value. These rules may include retrospective and prospective formulaic valuation methods, proxies for presumptive valuations, adjustments from prior events, and addressing valuation discounts.
Section 2(a), new Chapter 18, Sections 2904, 2905; Section 2(d) amending Section 6662
Information Reporting, Audits, and Valuation Understatement Penalties
The bill requires the Secretary to establish information reporting requirements for assets, potentially integrating with existing income reporting. It mandates annual audits of at least 30% of wealth tax taxpayers. It also introduces new accuracy-related penalties for 'substantial wealth tax valuation understatement,' with increased penalty rates for 'gross wealth tax valuation misstatements.'
Section 4, new Section 7813
Authorization of Appropriations for IRS
This section authorizes appropriations for the Internal Revenue Service (IRS) for fiscal years 2027 through 2037. The authorized amounts include $70 billion for enforcement of the tax code, $10 billion for taxpayer services, and $20 billion for business system modernization.
For unmarried individuals who die during a calendar year, the wealth tax is applied as of the date of death, and the tax amount is prorated based on the number of days the individual was alive in that year. The tax for the year of death is considered to have been imposed before death for estate tax purposes.
Section 2(a), new Chapter 18, Section 2903(a)
Why it matters:This is standard legislative practice to handle edge cases like death within a tax year and coordinate with existing tax code sections, ensuring fairness and preventing double taxation on the same assets at the same time.
Case for: Proponents argue this ensures fairness by prorating the annual tax for individuals who die mid-year and provides clarity on how the wealth tax interacts with estate tax liabilities, preventing unintended burdens on estates.
Case against: No specific opposition is typically raised against this technical coordination provision, though opponents of the wealth tax itself would see this as an extension of an objectionable tax.
Estimated impact: Minor administrative impact for estates of ultra-wealthy individuals, ensuring proper calculation of final tax liability and coordination with existing estate tax rules.
Any property transferred by the taxpayer after the date of the enactment of this chapter, to an individual who is a member of the family of the taxpayer (as determined under section 267(c)(4)) and has not attained the age of 18, shall be treated as property of the taxpayer for any calendar year before the year in which such individual attains the age of 18.
Section 2(a), new Chapter 18, Section 2902(c)(2)
Why it matters:This provision is likely intended to prevent a common tax avoidance strategy where wealth is transferred to minor children to reduce the parent's taxable estate or wealth, thereby ensuring the tax applies to the intended pool of wealth.
Case for: Proponents argue this prevents a straightforward loophole where wealthy individuals could easily shift assets to minor children to fall below wealth tax thresholds, ensuring the tax applies to the intended pool of wealth.
Case against: Critics might argue it complicates legitimate family gifting and financial planning, potentially impacting families who wish to provide for their children's future without tax avoidance intent.
Estimated impact: Prevents a significant avenue of tax avoidance, potentially retaining substantial wealth within the taxable base for the wealth tax.
If an individual pays wealth tax on property held by a trust (due to attribution rules), they are entitled to recover that amount from the trust. If the trust does not reimburse the taxpayer, the taxpayer is treated as having made a gratuitous transfer to the trust in that amount.
Section 2(a), new Chapter 18, Section 2902(c)(3)(C)
Why it matters:This provision is essential for fairness when trust assets are attributed to an individual for tax purposes, ensuring the individual isn't solely burdened by a tax on assets they don't directly control. The 'gratuitous transfer' clause is an anti-avoidance measure to ensure the tax burden is ultimately borne by the trust's wealth.
Case for: Proponents argue this provision ensures that the actual economic burden of the wealth tax falls on the trust assets when they are attributed to an individual, preventing an individual from being taxed on wealth they cannot access to pay the tax.
Case against: Opponents might argue it adds another layer of complexity to trust administration and could lead to disputes between beneficiaries and trustees, further complicating the already challenging trust rules.
Estimated impact: Facilitates the practical payment of wealth tax when trust assets are involved, preventing liquidity issues for individuals and ensuring the tax is ultimately borne by the wealth.