Wealth Proceeds Tax Amendment Act of 2026

Statement of Introduction
Wealth Proceeds Tax Amendment Act of 2026

July 8, 2026

In April 2026, the D.C. Council was handed a budget by the Mayor that was balanced on
the backs of our most vulnerable residents. Although t he Council identified one-time
funding to address many of the funding gaps for essential human services, policymakers
were forced to decide what some would have to go without : housing, healthcare, food
assistance, childcare, violence prevention, child and family services. Yet, the budget asked
nothing of our wealthiest residents.
For more than a decade, this Council has buried conversations about revenue and long-
term financial stability. Year after year, the Mayor cuts and sweeps the money for things
she doesn’t support, and the Council is forced to find the money to keep critical programs
afloat for one more year. Without a more holistic approach to the budget and revenues, the
next Mayor and the next Council will be back in the same place next year.
In 1996, the District of Columbia Tax Revision Commission was created by the D.C. Council
and mandated to comprehensively review the District’s tax code every ten years and provide
legislators with a policy recommendations report.1 The first report was researched, drafted,
and published in 1998.2 The practice was repeated again in 2013 when the Commission was
revived to deliver a package of updated tax recommendations to Council , which they
produced the following year.3
However, in 2024, when policymakers commissioned the tax body again to prepare a new
report, politics torpedoed the release of recommendations at the last minute .4 Instead, the
Commission published a short five -page letter with a brief “revenue neutral” list of
proposals.5

1 D.C. Code §§ 47–461 et seq. (1996).
2 D.C. Tax Revision Commission Report (1998), https://cfo.dc.gov/page/dc-tax-revision-commission-1998.
3 D.C. Tax Revision Commission Report (2014),
https://cfo.dc.gov/sites/default/files/dc/sites/ocfo/publication/attachments/DC%20Tax%20Revision%20050114.pdf.
4 Alex Koma, D.C.’s Influential Tax Revision Commission is Melting Down, Undermining Confidence in Its Work,
WASHINGTON CITY PAPER (March 25, 2024),
https://washingtoncitypaper.com/article/686068/d-c-s-influential-tax-revision-commission-is-melting-down-undermining-
confidence-in-its-work/.
5 Chairman’s Mark Letter (January 5, 2024), https://cdn.prod.website-
files.com/63bc270f792ad26d64988e32/65a0073781885c05b3c65bf2_Chairman%27s%20Mark%20letter.pdf.

In response to the Tax Revision Commission’s failure to produce a report in time for the
Fiscal Year 2025 budget, I introduced legislation, with support from councilmembers
Charles Allen, Janeese Lewis -George, and Zachary Parker , to establish a permanent Tax
and Revenue Commission that would be charged with providing recommendations focused
on more equity, broadening the tax base, encouraging business growth, assessing the impact
of fines and fees, and increasing transparency in the tax code.6 The bill still sits in committee
awaiting a hearing.7
Every year that we consider the city’s budget without the benefit of recommendations from
the Commission is a year that we could be doing more to make the tax code more code farer
for District residents. Instead, we do our best to make piecemeal tweaks, without the benefit
of the comprehensive look we need to make reliable and sound tax policy.
This past budget cycle, I proposed a Wealth Proceeds Tax to amend the District’s tax code:
a 3 percent surcharge on passive income —such as capital gains , dividen ds, interest,
annuities, and other investment s that require no labor—on the wealthiest residents. The
change would apply to individuals making over $400K, and married couple s making over
$500K.8 The surcharge is a local version of the federal Net Investment Income Tax 9—
straightforward and easy to administer (and enacted by other states).10 The tax is estimated
to increase the General Fund by $200 million in Fiscal Year 2027 and estimated to raise
hundreds of millions in subsequent years.11
Too much wealth at the top and too little at the bottom is not good policy , especially when
we acknowledge that we tax earned income on middle class and working people’s labor
significantly more than unearned income. The bottom line is this: we are facing a fiscal cliff,
and we cannot ask the people who need the most to give even more and ask those with the
most to give nothing more. The Wealth Proceeds Tax is one of many proposals that can
establish a fairer and more resilient tax code, and one worthy of consideration.

6 B25-0850 - Tax and Revenue Commission Establishment Amendment Act of 2024,
https://lims.dccouncil.gov/Legislation/B25-0850; see also, Press Release: New Tax Commission Would Replace Existing
(June 18, 2024) https://brianneknadeau.com/new-tax-commission-would-replace-existing/.
7 B26-0014 - Tax and Revenue Commission Establishment Amendment Act of 2025,
https://lims.dccouncil.gov/Legislation/B26-0014.
8 Remarks, Office of Ward 1 Councilmember Brianne K. Nadeau, FY27 Budget Wrap (June 25, 2026),
https://brianneknadeau.com/fy27-budget-wrap/.
9 United States Internal Revenue Service, Questions and Answers on the Net Investment Income Tax,
https://www.irs.gov/newsroom/questions-and-answers-on-the-net-investment-income-tax.
10 Sarah Austin and Carl Davis, The Wealth Proceeds Tax: A Simple Way for States to Tax the Wealthy, Institute on
Taxation and Economic Policy (October 30, 2025), https://itep.org/wealth-proceeds-tax-net-investment-income-tax/.
11 See Id. Appendix A, Table A.1. Revenue Potential of State-Level Wealth Proceeds Taxes (WPT) in 2026 at Various
Rates; see additional revenue estimates: Office of Ward 1 Councilmember Brianne K. Nadeau, Wealth Proceeds Tax
Explainer (last accessed July 8, 2026), https://brianneknadeau.com/wealth-proceeds-tax/#explainer.
1

_____________________________
Councilmember Brianne K. Nadeau

A BILL

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IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

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To amend Chapter 18 of Title 47 of the District of Columbia Official Code to establish and 1
implement a surcharge on proceeds or profits generated by wealth holdings of high-2
income households. 3
4
BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this 5
act may be cited as the “Wealth Proceeds Tax Amendment Act of 2026”. 6
Sec. 2. Chapter 18 of Title 47 (D.C. Official Code §§ 47-1801 et seq.) of the District of 7
Columbia Official Code is amended as follows: 8
“(a) The table of contents is amended by inserting a new line to read as follows: 9
“§ 47-1806.03a. Wealth Proceeds Tax.”. 10
“(b) A new Section 47-1806.03a is added to read as follows: 11
“§ 47-1806.03a. Wealth Proceeds Tax.”. 12
“(a) For the purposes of this section, the following definitions shall apply: 13
“(1) “District modified adjusted gross income” means federal modified adjusted 14
gross income, subject to the adjustments set forth in § 47-1803.02(a)(1)(B)(ii). 15
“(2) The term “federal modified adjusted gross income” shall have the same 16
meaning as set forth in section 1411(d) of the Internal Revenue Code, subject to the following 17
adjustments: 18

2

“(A) Interest on U.S. obligations that District is prohibited from taxing 19
under federal law shall be excluded; and 20
“(B) Interest on obligations issued by state and local governments other 21
than the District shall be included. 22
“(3) “Threshold amount” means: 23
“(A) in the case of married individuals or registered domestic partners 24
filing separately on a combined return, $500,000 divided evenly among the taxpayers; 25
“(B) in the case of married individuals, registered domestic partners, or a 26
qualifying surviving spouse filing a joint return, $500,000; 27
“(C) in the case of married individuals or registered domestic partners 28
filing a separate return, $250,000; and 29
“(D) in the case of all other taxpayers filing a return, $400,000, except that 30
in the case of a fiduciary making a return on behalf of an estate or trust pursuant to § 47-1809.03, 31
$16,000. 32
“(4) The term “wealth proceeds” shall have the same meaning as “net investment 33
income” that is set forth in section 1411(c) of the Internal Revenue Code, subject to the 34
following adjustments: 35
“(A) Interest on U.S. obligations that District is prohibited from taxing 36
under federal law shall be excluded; 37
“(B) Interest on obligations issued by state and local governments other 38
than the District shall be included; and 39
“(C) Income of an incomplete gift non-grantor trust, less any deductions of 40
the trust, to the extent such wealth proceeds and deductions of such trust would be taken into 41
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account in computing the taxpayer’s federal taxable income if such trust in its entirety were 42
treated as a grantor trust for federal tax purposes shall be included for a taxpayer who transferred 43
property to an incomplete gift non-grantor trust. 44
“(5) The term “incomplete gift non-grantor trust” means a resident trust that meets 45
the following conditions: 46
“(A) The trust does not qualify as a grantor trust under sections 671 47
through 679 of the Internal Revenue Code, and 48
“(B) The grantor's transfer of assets to the trust is treated as an incomplete 49
gift under section 2511 of the Internal Revenue Code, and the regulations thereunder. 50
“(b) In the case of an individual, estate, or trust there is hereby imposed (in addition to 51
any other tax imposed) for each taxable year beginning after December 31, 2025, a tax equal to 3 52
percent of the lesser of: 53
“(1) Wealth proceeds for such taxable year, or 54
“(2) Federal modified adjusted gross income for such taxable year, less the 55
threshold amount. 56
“(c) For an individual who is not a resident of the District for the entire taxable year, the 57
tax under this subsection must be calculated as if the individual is a resident of the District for 58
the entire year, and that amount must be multiplied by a fraction in which: 59
“(1) The numerator is wealth proceeds allocable under § 47–1806.01 to the 60
District, and 61
“(2) The denominator is the total amount of wealth proceeds for the taxable year. 62
“(d) For an estate or trust, the tax under this section must be calculated by multiplying the 63
wealth proceeds tax liability by a fraction, the numerator of which is the amount of the estate or 64
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trust’s wealth proceeds allocated to the state pursuant to the provisions of sections § 47-1809.03, 65
and the denominator of which is the taxpayer’s total wealth proceeds. 66
“(e) All references to the Internal Revenue Code in this section shall refer to the code in 67
effect as of January 1, 2026.”. 68
Sec. 3. Fiscal impact statement. 69
The Council adopts the fiscal impact statement in the committee report as the fiscal 70
impact statement required by section 4a of the General Legislative Procedures Act of 1975, 71
approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a). 72
Sec. 4. Effective date. 73
This act shall take effect after approval by the Mayor (or in the event of veto by the 74
Mayor, action by the Council to override the veto), a 30-day period of congressional review as 75
provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 76
24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and publication in the District of 77
Columbia Register. 78