Bill
HR 8085
Establishes a national annual wealth tax on net asset values above $50 million with rates 0% up to $50M, 2% for >$50M–$1B, and 3% for >$1B (6% if health coverage legislation passes
Purpose and scope
- What it aims to do: Establish a national wealth tax on the net value of individuals’ taxable assets, effectively targeting ultra-high-net-worth households. The tax is computed on the last day of each calendar year and applies to both residents and certain expatriates under defined rules.
- Legal framing: Amends the Internal Revenue Code to create a new wealth tax under a new Subtitle B–1, Chapter 18, with detailed rules for computation, reporting, enforcement, and administration.
Key provisions and how the tax would work
- Tax base: Net value of all taxable assets owned by a taxpayer, calculated as the value of property minus debts, with several exclusions (see exclusions below).
- Thresholds and brackets (Section 2901):
- Zero bracket threshold: $50,000,000 (0% up to this amount).
- Top bracket threshold: $1,000,000,000.
- Tax structure on brackets:
- 0% on net value up to $50M.
- 2% on net value above $50M and up to $1B.
- 3% on net value above $1B (with potential higher rate if qualifying legislation is enacted).
- Progressive rate triggers:
- A base applicable percentage of 3% (default).
- 6% applicable rate in a calendar year when there is legislation meeting specific requirements described in the bill (a health insurance program covering all residents and prohibiting duplicate private benefits). This acts as a conditional higher-rate scenario tied to broader health coverage legislation.
- Married couples and trusts:
- Married individuals are treated as one taxpayer for the purposes of the tax.
- Nongrantor multibeneficiary trusts are treated as individual taxpayers for purposes of the wealth tax, with rules that allocate bracket amounts among beneficiaries and trusts, including treatment of unused bracket amounts and recoveries from trusts.
- Exclusions from the net value (Section 2902):
- Assets valued at $50,000 or less (per property, excluding debt, and within specified categories).
- Tangible personal property that is not used in a trade or business, not deductible under §212, and not a collectible, boat, aircraft, mobile home, trailer, vehicle, antique or similar asset that appreciates in value.
- Certain assets are treated as owned by the taxpayer for estate planning purposes, gifts to relatives, or trusts, with detailed rules to determine ownership and attribution.
- Special trust rules (Section 2903):
- Detailed mechanics for nongrantor multibeneficiary trusts, including how zero and top bracket thresholds are allocated among beneficiaries and trusts, and how recoveries/credit for tax paid are handled if property held by a trust is included in the taxpayer’s net value.
- Rules for split-interest trusts (charitable remainder/unitrusts and charitable lead trusts) to determine which portion of interests are taxed to the beneficiaries versus the trust, with specific valuation treatments.
- Valuation rules (Section 2902 and 2904):
- The Secretary must establish valuation rules within 12 months of enactment, including methods for assets with no readily ascertainable value or not publicly traded.
- Valuation can use retrospective, prospective, formulaic approaches, proxies, or deferral-based adjustments, and may address valuation discounts.
- Special deceased/expatriate provisions (Section 2903):
- For decedents who die in a year, the tax can be prorated based on days remaining in the year after death.
- Non-residents and covered expatriates have targeted application rules, with coordination to estate and expatriation considerations.
- Information reporting and enforcement (Sections 2904–2905):
- The Secretary must require information reporting on net asset values, potentially through existing reporting channels (e.g., integration with foreign account reporting regimes).
- Annual audits of at least 30% of taxpayers subject to the tax.
- Anti-avoidance and penalties:
- Adds penalties related to substantial wealth tax valuation understatement (understatements of 65% or less of correct valuation are flagged; higher penalties apply for understatements considered substantial wealth tax valuation misstatements).
- Ties accuracy penalties to wealth tax valuation misstatements with enhanced penalties (e.g., 30–50% increases in certain cases).
- IRS funding and administration (Section 4):
- Authorizes significant new funding for enforcement, taxpayer services, and system modernization:
- Enforcement: $70 billion (fiscal years 2027–2037)
- Taxpayer services: $10 billion
- Business system modernization: $20 billion
- Effective date and reporting:
- Applies to calendar years beginning after December 31, 2026.
- Periodic congressional reports on administration and enforcement every two years starting January 1, 2029.
Information and timeline highlights
- Effective date: Calendar years after 2026 begins; full implementation would follow the necessary regulatory rulemaking.
- Valuation rules: To be established within 12 months of enactment.
- Regular reporting: Treasury to produce biennial congressional reports beginning in 2029.
- Compliance and enforcement: Substantial funding and audits are woven into the bill’s framework to ensure administration.
Potential impacts
- Affects ultra-wealthy individuals with net asset values above $50M, with significant consideration for multi-beneficiary trusts and complex ownership structures.
- Encourages or necessitates comprehensive asset valuation, reporting, and possible restructuring of holdings to comply with the new regime.
- Substantial funding for the IRS could enhance enforcement and administration of not only the wealth tax but broader tax compliance efforts.
- The conditional increase to 6% in certain years creates a linkage to universal health coverage legislation, introducing a policy-driven conditional rate.
Who would be affected
- Individual taxpayers with net asset values above the thresholds.
- Owners of complex trust arrangements, including nongrantor multibeneficiary trusts and split-interest trusts.
- Financial institutions and reporting entities tasked with asset-value reporting.
- The IRS and Treasury, given expanded enforcement funding and valuation rulemaking obligations.
Note: This is a high-level, non-partisan summary of the bill’s substantive provisions as introduced in March 2026. For detailed application, regulatory rules, and potential interactions with existing tax law, refer to the bill text and subsequent committee actions.
Compiled from official sources — confirm details with the bill’s official record.
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