The Ultra‑Millionaire Tax Act of 2026 adds a new subtitle to the Internal Revenue Code that imposes an annual tax on the net value of an individual’s worldwide assets as of year‑end (or date of death), with a $50 million exempt amount and a top bracket at $1 billion. The bill sets tiered rates (2 percent and a base 3 percent top rate) with an automatic doubling of the top rate to 6 percent if comprehensive universal health‑insurance legislation meeting specified conditions is in effect.
Beyond the headline tax, the bill creates detailed rules for counting assets held in trusts, mandates new valuation methods for illiquid and closely held property, authorizes extensive information reporting obligations on financial institutions and entities, raises accuracy penalties for valuation misstatements, and directs large, multi‑year appropriations to the IRS to staff enforcement, taxpayer services, and IT modernization. The proposal restructures compliance and valuation responsibilities for wealthy individuals, trustees, advisors, and the IRS itself — and shifts practical disputes from ordinary income reporting to asset valuation and ownership attribution.
At a Glance
What It Does
The bill imposes an annual wealth tax on individuals equal to 0% up to $50 million, 2% on net assets between $50 million and $1 billion, and an applicable percentage on amounts above $1 billion (3% normally; 6% if qualifying universal health coverage is in law). It defines taxable ‘net value of all taxable assets,’ prescribes valuation rulemaking, creates trust attribution rules, raises penalties for valuation understatements, and requires broad information reporting.
Who It Affects
High‑net‑worth individuals with net assets above $50 million, nongrantor multibeneficiary trusts and their beneficiaries, wealth managers and financial institutions required to report asset values, and the IRS (which receives major appropriation authority to implement and audit).
Why It Matters
This is a first‑of‑its‑kind federal net‑wealth tax framework that shifts enforcement emphasis from income flows to asset valuations and ownership structures, introduces formulaic valuation tools for illiquid assets, and embeds trust attribution rules that will alter estate planning and trust design.
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What This Bill Actually Does
The Act creates a new chapter (chapter 18) in the Internal Revenue Code that levies an annual tax on the ‘‘net value of all taxable assets’’ of individuals. The tax is measured as of the last day of the calendar year (or date of death for decedents), with a $50 million zero bracket and a $1 billion top bracket.
Amounts between those thresholds are taxed at 2 percent; amounts above $1 billion are taxed at a higher applicable percentage—3 percent by default and 6 percent in any year when specified universal health‑insurance legislation is in effect. Married individuals are treated as a single taxpayer for the wealth tax.
The bill specifies what counts as assets and what is excluded. It treats assets that would be included in a decedent’s estate as the taxpayer’s assets and reaches transfers to minors and many trust arrangements.
Grantor trusts are already attributed to the grantor under existing rules, and the bill adds attribution for many nongrantor trusts: single‑beneficiary nongrantor trusts’ assets get treated as belonging to their beneficiary, and nongrantor multibeneficiary trusts are treated as separate taxpayers with special rules that let beneficiaries allocate portions of the unused lower brackets to a trust. The Secretary of the Treasury must issue valuation rules within 12 months and is explicitly authorized to adopt formulaic and proxy‑based valuation approaches for illiquid or closely held assets.To support administration, the Secretary must promulgate reporting rules requiring institutions and other entities to provide information needed to calculate net wealth; the bill contemplates tying those reports into current information flows (including chapter 4/FATCA infrastructure).
Enforcement is front‑loaded: the Secretary must audit at least 30 percent of required taxpayers annually. The Act also raises accuracy‑related penalties for ‘‘substantial wealth tax valuation understatements’’ (a claimed value that is 65 percent or less of the correct value) and provides sharper penalty rates for larger misstatements (a ‘‘gross’’ misstatement defined at 40 percent).
Finally, the bill authorizes large appropriations to the IRS over ten years targeted at enforcement ($70 billion), taxpayer services ($10 billion), and business systems modernization ($20 billion), and it allows limited extensions for payment of the wealth tax for taxpayers with severe liquidity constraints or undue hardship.
The Five Things You Need to Know
The tax exempts the first $50,000,000 of net assets and taxes the next layer up to $1,000,000,000 at 2 percent, with a top‑bracket rate of 3 percent on assets above $1 billion (6 percent if qualifying universal health legislation is in effect).
The bill treats married couples as one taxpayer and requires many nongrantor trusts — particularly multibeneficiary trusts — to be taxed as separate taxpayers or have assets attributed to beneficiaries under complex allocation rules.
The Secretary must issue valuation rules within 12 months and may use retrospective or prospective formulaic methods and proxy‑based approaches for illiquid or closely held assets, explicitly permitting use or limitation of valuation discounts.
The Secretary must annually audit at least 30 percent of taxpayers subject to the wealth tax, and Congress authorizes $70 billion for enforcement plus $30 billion for taxpayer services and modernization over FY2027–2037.
The bill creates an accuracy‑related penalty regime for ‘‘substantial wealth tax valuation understatements’’ (claimed value ≤65% of correct value) with escalated penalty rates and a separate threshold (40%) for ‘‘gross’’ misstatements.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Imposition and rate structure of the wealth tax
This section imposes the new annual tax on individuals’ net value of taxable assets measured at year end, sets the zero bracket at $50 million and the top bracket at $1 billion, and lays out the three‑tiered rate schedule (0% up to $50M, 2% between $50M and $1B, and an applicable percentage above $1B). It also provides the mechanism that doubles the top rate to 6% when congressionally defined universal health‑coverage legislation is in effect, and it treats married people as a single taxable unit—an administrable but substantive choice that changes filing and aggregation outcomes for couples.
Definition of 'net value of all taxable assets' and exclusions
This provision defines net value as the value of all property (worldwide, unless a taxpayer is nonresident) minus debts, and then carves out de minimis tangible personal property (items ≤ $50,000) and certain collectibles and consumer assets. It requires the Secretary to issue valuation rules within 12 months and expressly authorizes formulaic valuation approaches, proxies, and guidance on valuation discounts — signaling that the agency may depart from purely market‑based appraisals for illiquid holdings.
Trust attribution rules and special allocations for nongrantor multibeneficiary trusts
Substantive attribution rules treat grantor‑trust assets as the grantor’s and require inclusion of assets transferred to minors by a grantor. For nongrantor trusts, single‑beneficiary trusts’ assets are attributed to the beneficiary, while multibeneficiary nongrantor trusts are treated as separate taxpayers with mechanics that let beneficiaries assign unused portions of their 0% and 2% brackets to a trust. The statute directs the Secretary to establish timing and method for those assignments, which creates practical coordination and recordkeeping obligations for trustees and beneficiaries.
Special timing and cross‑reference rules for death, nonresidents, and expatriates
The Act adjusts measurement for decedents (tax computed as of date of death with a pro rata reduction for the post‑death days), coordinates the wealth tax with estate‑tax treatment, limits application for nonresident noncitizens to US‑situated property, and applies accelerated and higher rates to covered expatriates (treating the year as ending on the day before expatriation and setting alternate rates of 40% for the slabs). These are operationally significant choices affecting exit taxation and estate planning.
Information reporting obligations
This section directs the Secretary to issue regulations within 12 months requiring reporting that will support enforcement of the wealth tax, including using and expanding existing reporting frameworks (chapter 4/FATCA). The Secretary can impose reporting obligations on financial institutions, business entities, and other persons, and may require firms to report estimates of entity value — a shift that pulls valuation and disclosure duties onto institutions beyond traditional income reporting.
Audit mandate
The statute mandates that the Secretary annually audit at least 30 percent of taxpayers subject to the wealth tax. That is an unusually high statutory audit floor, aimed at deterrence but requiring significant staffing and program design (selection methodology, appeals handling, and coordination with existing IRS examination processes).
Anti‑avoidance, penalty enhancements, payment extensions, and IRS funding
Section 3 authorizes the Treasury to promulgate anti‑avoidance regulations targeting assets placed in foreign entities to evade reporting, and requires a plan to leverage FATCA data. The bill amends penalty provisions to create a ‘‘substantial wealth tax valuation understatement’’ standard (≤65% of correct value) and increases penalty rates (up to 50% for the largest misstatements). It allows the IRS to extend payment of the wealth tax up to five years for taxpayers with severe liquidity constraints or undue hardship, subject to rules. Section 4 authorizes large appropriations over FY2027–2037: $70B for enforcement, $10B for taxpayer services, and $20B for business systems modernization — an explicit recognition that administering an asset tax will require major capacity investments.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Internal Revenue Service — receives statutory audit targets and $70B (enforcement), $10B (taxpayer services), and $20B (IT modernization) authorizations to build capacity, hire examiners, and develop valuation tools needed to administer an asset tax.
- Federal policymakers supporting universal health coverage — the bill links a higher top rate (6%) to the enactment of comprehensive universal health‑insurance legislation that prohibits duplicate private benefits, effectively creating a revenue lever that can supplement health funding if such legislation passes.
- Tax researchers and valuation professionals — demand for certified valuation specialists, new formulaic valuation product lines, and advisory services will expand as the Treasury issues rules for illiquid‑asset valuation and institutions respond to reporting requirements.
- Beneficiaries of charitable remainder and lead trusts with properly structured split‑interest arrangements — the bill carves out present values of certain charitable interests, preserving longstanding treatment for many charitable vehicles when properly documented.
- Revenue collection and compliance programs — litigators and audit units may benefit operationally from statutory clarity on penalties and audit coverage that strengthen the IRS’s enforcement posture.
Who Bears the Cost
- Individuals with net assets above $50 million — face a new annual tax with tiered rates, greater valuation scrutiny, higher penalties for valuation misstatements, and potential cash‑flow pressure if assets are illiquid.
- Nongrantor multibeneficiary trusts and beneficiaries — must navigate complex allocation rules for unused bracket amounts, possible separate trust taxation, and administrative burdens for assignments and reporting.
- Financial institutions and wealth‑management firms — will shoulder new reporting obligations, may be required to produce entity value estimates, and will face increased compliance and recordkeeping costs and potential liability risks.
- Estate planners and family offices — need to redesign planning strategies given the reach of attribution rules, treatment of transfers to minors, and interaction with estate and gift regimes; implementation will require new legal and administrative expense.
- Taxpayers subject to valuation disputes — face elevated accuracy penalties (thresholds at 65% and 40%) that can materially increase the cost of valuation errors and incentivize conservative reporting or expensive third‑party appraisals.
Key Issues
The Core Tension
The central dilemma is straightforward but sharp: the bill targets concentrated wealth by taxing asset values rather than income, which satisfies a fairness and revenue objective, but that approach rests on hard measurement, intrusive reporting, and significant administrative muscle — and it risks distortions (forced asset sales, liquidity crises), privacy and treaty tensions, and high compliance costs for taxpayers and institutions before revenue is reliably collected.
The Act’s biggest implementation challenge is valuation. The statute deliberately empowers the Secretary to adopt formulaic and proxy‑based valuation methods for illiquid or closely held assets, but those methods convert what are often negotiated, context‑sensitive values into administrable formulas.
That raises acute disputes over which proxy is appropriate, how to treat minority interest or lack‑of‑marketability discounts, and whether retrospective adjustments (for example, charging on eventual sale proceeds) are administratively feasible and legal under existing tax principles. The Treasury will need both technical valuation expertise and procedural safeguards to avoid arbitrary or litigated valuations.
Second, attribution and trust rules will reconfigure estate planning. Treating many nongrantor trusts as taxable entities or attributing trust assets to beneficiaries closes some avoidance pathways but creates new coordination problems: beneficiaries must decide how to assign unused bracket amounts, trustees must track allocations and provide documentation, and the administrative costs can be substantial.
Coupling high audit intensity (30% minimum) with large penalties for valuation misstatements increases both deterrence and the stakes of disputes, potentially multiplying appeals and litigation that the IRS must be resourced to handle.
Finally, linking the top rate to the enactment of universal health legislation creates revenue unpredictability and policy linkage that may complicate both tax administration and political negotiation. The payment‑extension authority softens immediate liquidity risk but leaves open questions about collateral, interest, and interplay with enforcement powers.
Cross‑border and treaty issues are implicit but unresolved: reporting and attribution rules aimed at foreign entities could raise treaty and confidentiality concerns that require careful regulatory calibration.
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