The Wealth Proceeds Tax Amendment Act of 2026 aims to address budgetary imbalances in the District of Columbia by introducing a 3 percent surcharge on passive income, such as capital gains and dividends, for high-income households. Specifically, this tax will apply to individuals earning over $400,000 and married couples earning over $500,000. The legislation seeks to create a more equitable tax system by ensuring that wealthier residents contribute more to the funding of essential services, which have been disproportionately affected by budget cuts. The proposed tax is expected to generate approximately $200 million for the General Fund in Fiscal Year 2027 and potentially hundreds of millions in subsequent years.

To implement this tax, the bill amends Chapter 18 of Title 47 of the District of Columbia Official Code by adding a new section, 47-1806.03a, which defines key terms such as "wealth proceeds" and establishes the tax structure. The bill also clarifies how the tax will be calculated for individuals, estates, and trusts, ensuring that it is based on wealth proceeds or modified adjusted gross income, whichever is lower, after accounting for a specified threshold amount. This legislative effort reflects a broader initiative to reform the tax code and promote fiscal stability in the District, particularly in light of the challenges faced by vulnerable populations.