Saying It Out Loud February 2026, By Pat Soldano

Reconciliation 2.0, State Wealth Taxes ‘In Play’ for 2026 Legislative Sessions; Monitoring is Key to Winning

The main sport in Washington, D.C., is predicting what new tax and economic proposals will gain momentum or get sacked.

It’s important we’re in the game monitoring the good, bad, and ugly proposals passing through the halls of Congress, especially those affecting family-owned businesses.

Next month, when members of Family Enterprise USA meet to support the Congressional Family Business Caucus (held March 17 on Capitol Hill), the “hot topic” legislative proposals will focus on affordability. Aptly, the meeting’s theme will be: “Pricing and Profits: Affordability Strategies for Family-Owned Businesses.”

In addition, new research from the Family Enterprise USA 2026 Annual Family-Owned Business Survey will be unveiled at the meeting, and this is when we identify what the most critical tax and economic issues are for family business leaders today.

Many of the proposed bills on Capitol Hill are still being developed, some in discussion behind closed doors, others looking for bipartisan support. Most will fizzle, but some will make it across the goal line possibly this year or down the road.

Of the proposals put forward publicly, we know our Capitol Hill legislators are looking at policies ranging from expanded paid family leave, capital-gains tax relief, and potential regulatory reforms, some or all of which could be wrapped together in a new “sister” bill to last year’s H.R. 1, or the “One Big Beautiful Bill Act,” which many in Washington are calling Reconciliation 2.0.

Our insiders, from the Brownstein legal and government affairs firm, see this potential bill as focusing heavily on proposals to address the affordability challenges facing families and family-owned businesses across the country.

One group of House members, which work together as the Republican Study Committee (RSC), has put forward a package of proposals – titled “Making the American Dream Affordable Again” – that is focused on rising costs of energy, housing, and healthcare. The package also targets spending cuts and extending tax policies, codifying deregulation, and strengthening energy production, among other goals.

“Reconciliation 2.0 is the most powerful and potent legislative tool in the toolbox for us to fix what’s broken,” said Committee Chairman Rep. Jodey Arrington (R-TX), and former co-chair of the Congressional Family Business Caucus.
Here’s what the RSC says about the scope of its package of proposals:

Key Components of the Reconciliation 2.0 Framework

• Energy & Environment: Promoting American energy dominance by accelerating permitting and reducing regulations.
• Healthcare: Reducing costs, increasing transparency, and empowering consumers through health savings accounts.
• Economic & Social Policy: Extending tax cuts, eliminating marriage penalties in the child tax credit, and addressing 401(k) contributions.
• Fiscal Responsibility: Implementing large-scale spending cuts, aiming to lower costs, and targeting waste in federal programs.

These are worthy objectives and some of the proposals could bring significant cost savings for family-owned businesses. But what are the odds Reconciliation 2.0 actually being signed into law? Right now, with mid-terms looming, passing another party-line bill will be challenging.

“While there are a lot of thoughtful proposals to address affordability challenges facing Americans, the reconciliation process is a long and complex road,” said Mark Warren, a shareholder at Brownstein. “With the extremely narrow vote margin in the House, the President will need to engage to ensure nearly unanimous support for passage of a second reconciliation bill,” said Warren.

More On the Horizon

The specter of state wealth taxes continues to cast its shadow over successful family-owned businesses and families.

Several states continue to discuss a wealth tax, with California moving toward a ballot initiative for the November elections that would impose a one-time 5% tax on Californians with more than $1 billion in assets. Illinois is considering a similar billionaires wealth tax, while Rhode Island has a wealth-tax proposal targeting residents with financial assets of more than $25 million, with certain exceptions.

Other states like Washington, Virginia, Rhode Island, Hawaii, and Michigan are proposing higher income tax rates or surcharges on high-income residents (e.g., annual income more than $1 million per year).

“When state legislatures or voters face a proposed wealth tax without significant public debate and analysis, wealth taxes stand a real chance of enactment,” said Russ Sullivan, who leads the tax-policy practice at Brownstein. “The closer the voters examine the real impact – such as California billionaires moving to Florida – the chances of a wealth tax becoming law fade,” said Sullivan.

Some of these proposals seek to tax unrealized gains and live in the shadow of the “Billionaires Income Tax Act,” first introduced in Congress by Senator Ron Wyden (D-OR), which has now also been introduced in the House of Representatives.

We’ve compiled a chart (Family Enterprise USA Wealth Tax Tracker) of the latest news from key states. Here are a few highlights:

• California: Voters may see a “Billionaire Tax Act” on the ballot in November, which would impose a 5% tax on certain assets of individuals/trusts valued over $1 billion.
• Washington: The legislature is actively pursuing a 9.9% income tax on high earners with income above $1 million, on top of its current 7% tax on capital gains.
• Illinois: Legislation is under consideration to impose an unrealized-gains tax on billionaires, although the proposal would face obstacles under the state constitution.
• Virginia: The legislature has several proposals under consideration to impose higher marginal tax rates on high-income earnings as well as a proposed 3.8% tax on net investment income.

Other proposals to watch are centered around new incentives to encourage businesses to provide paid leave for employees, indexing capital gains, proposals to repeal the federal estate tax, potential wealth taxes on unrealized gains, and new and modified regulations that can increase compliance cost on business operations.

Keeping our eye on the ball and advocating for family-owned businesses is a full contact sport in Washington and state capitals across the nation, and in 2026 we must engage and defeat tax proposals that will discourage successful entrepreneurs from taking economic risks that create jobs and improve communities across the country.

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