Millionaires Surtax Act
- Sponsor
- Rep. Beyer, Donald S. [D-VA-8]
- Committees
- Ways and Means Committee (primary)
- Last action
- Apr 15, 2026
Bottom line
The Millionaires Surtax Act imposes a new 10% federal income surtax on the portion of modified adjusted gross income above specified thresholds for the wealthiest individuals, aiming to increase federal revenue.
What it actually does
This bill amends the Internal Revenue Code of 1986 to establish a new 10% surtax on the modified adjusted gross income of high-income individuals. The surtax applies to income exceeding $2,000,000 for joint filers and $1,000,000 for single filers, effective for taxable years beginning after December 31, 2026. It also includes special rules for nonresident aliens, citizens living abroad, and charitable trusts.
Proponents argue
Supporters argue that this surtax is a crucial step towards ensuring tax fairness, requiring the wealthiest individuals to contribute a more equitable share to federal revenue. They contend it will help address income inequality and provide additional funds for public services or deficit reduction without burdening middle and lower-income taxpayers.
Opponents contend
Opponents contend that imposing an additional surtax on high-income individuals could discourage investment, reduce incentives for entrepreneurship, and potentially lead to capital flight or tax avoidance strategies. They argue that such measures could ultimately harm economic growth and may not generate the anticipated revenue if high earners alter their financial behavior.
The bill is very concise and can be understood quickly, allowing ample time for a thorough evaluation of its provisions and potential impacts.
Section 2, adding new Section 59B to the Internal Revenue Code
Imposition of a 10% Surtax on High-Income Individuals
This provision establishes a new 10% federal income tax, referred to as a surtax, on a specific portion of the income earned by high-income individuals. For married couples filing jointly, the surtax applies to modified adjusted gross income (AGI, with a minor adjustment for investment interest deductions) above $2,000,000. For single filers, the threshold is $1,000,000. This additional tax is imposed on top of existing income taxes and is scheduled to take effect for taxable years beginning after December 31, 2026.
Supporters argue
Supporters argue this surtax is a necessary step to ensure tax fairness, requiring those who have benefited most from the economy to contribute more to public services and deficit reduction. They contend that the thresholds are high enough to only affect the wealthiest, minimizing impact on the broader economy.
Critics contend
Opponents contend that this surtax represents an additional tax burden on successful individuals, potentially disincentivizing investment, entrepreneurship, and job creation. They argue it could lead to capital flight or tax avoidance strategies, ultimately harming the economy and potentially yielding less revenue than projected.
Tradeoffs
The bill balances the goal of increasing federal revenue and addressing income inequality against concerns about potential negative impacts on economic incentives, investment, and the competitiveness of the U.S. tax system for high earners.
This section outlines special rules, including the exclusion of charitable trusts from the surtax, an adjustment to the income threshold for U.S. citizens and residents living abroad who utilize the foreign earned income exclusion, and a clarification that the surtax does not apply for purposes of calculating other tax credits or the alternative minimum tax (Section 55).
Section 2(a), adding new Section 59B(d) to the Internal Revenue Code
Why it matters:This is standard legislative practice to include specific exclusions and interactions with other parts of the tax code, ensuring the surtax is applied fairly and intentionally without creating unintended consequences or double taxation issues.
Case for: Supporters argue these provisions ensure the surtax is applied fairly and intentionally, preventing unintended consequences for charitable giving or for Americans working abroad, and avoiding complex interactions with existing tax credits or the AMT.
Case against: Critics might argue that the exclusions for charitable trusts could be exploited, or that the adjustments for citizens abroad add complexity without sufficient justification. However, these are generally seen as technical refinements rather than controversial policy points.
Estimated impact: These provisions refine the scope of the surtax, potentially reducing the total revenue collected slightly compared to a blanket application, but ensuring targeted and equitable application.