Oligarch Act Imposes New 2% to 8% Annual Wealth Tax on Assets Exceeding $50 Million Threshold

The newly proposed Oligarch Act of 2025 rips up the old rulebook by introducing a federal Wealth Tax that hits the ultra-rich not on what they earn, but on what they own. Starting the year after enactment, if your total net worth—assets minus debts—exceeds a certain threshold, you’ll owe an annual tax ranging from 2% to 8%.

The Math Behind the Mega-Wealth Tax

This isn't a flat tax; it’s tiered, and the rates are steep. The tax only kicks in once your net worth crosses the "threshold amount." That starting line isn't fixed, but it’s calculated annually based on national median household wealth, ensuring it targets the top tier. For the sake of easy math, let’s assume the threshold lands around, say, $50 million (1,000 times the median wealth).

If you’re an individual taxpayer, the rates climb quickly: you pay 2% on the first segment of wealth above the threshold, scaling up to 4%, then 6%, and finally hitting 8% on any wealth that exceeds 1,000 times that initial threshold. If your wealth is tied up in a trust, it’s even simpler—and harsher—with a flat 8% rate on the net worth above the threshold. This tax is also non-deductible against your regular income taxes, meaning it’s a pure addition to your annual tax bill (Section 275).

What Counts as 'Your Stuff'

When calculating net worth, the bill is pretty broad: it includes everything from real estate and stocks to cash and private businesses. However, there are a few carve-outs. You get a pass on personal tangible property worth $50,000 or less—think your furniture or basic car—unless it’s a collectible, a boat, a plane, or otherwise used for business. The bill is clearly aiming to capture assets that hold or increase value over time, not your everyday items.

The bill also closes a common loophole: if you gift property to a family member under 18 after the law is passed, that property still counts as yours until they turn 18. This prevents parents from simply shifting assets to minor children to duck the tax. The rules for trusts are also complex, essentially looking through the trust structure to attribute ownership back to the person who set it up or the beneficiaries, ensuring that wealth held in these structures doesn't escape taxation.

The Enforcement Hammer and Valuation Headache

The biggest practical challenge—and potential source of headaches—lies in valuation and enforcement. The Treasury Secretary has one year to figure out how to value assets that aren't publicly traded, like private company stakes, art collections, or complex financial instruments. The bill mentions using “new formulaic methods,” which sounds like a massive regulatory undertaking and potentially a huge source of legal disputes, as the value of a private business is rarely straightforward.

To ensure compliance, the IRS is mandated to audit at least 30% of all taxpayers subject to this wealth tax every single year. That’s a huge audit rate and signals a major increase in IRS resources and scrutiny. If you get audited and the IRS finds you significantly undervalued your assets—specifically, if your claimed value is 65% or less of the correct value—the penalty rate jumps from 20% to 30%. If you’re really off (40% or less of the correct value), that penalty can hit 50% (Section 2. Penalties for Misstatement).

This creates a high-stakes compliance environment. If your wealth is tied up in a private business, and the annual tax payment causes “severe liquidity problems or undue hardship,” the Secretary may grant an extension of up to five years to pay the tax. But that's a discretionary decision, not a guarantee. The reality is that this tax is levied on wealth, not income, meaning the taxpayer might have to sell assets—potentially a portion of their illiquid business—just to pay the annual tax bill. This provision sets up a complicated annual scramble for cash flow among the ultra-wealthy and those who manage their assets.