Congress proposes 100% tax on President's own IRS settlement proceeds.

What it does

This bill imposes a 100% tax on any money a person receives from a settlement fund created by a lawsuit the President of the United States files against the IRS. The tax applies to the full amount received, but the settlement payment itself is excluded from the recipient's taxable income—meaning the person pays the 100% tax on money that is not counted as income. The bill takes effect immediately upon enactment.

Why we flagged it

The bill creates a novel 100% tax specifically targeting settlement payments from lawsuits filed by the sitting President against the IRS. This is not a general tax policy but a targeted mechanism that appears designed to either punish recipients of such settlements or to ensure that any proceeds from Presidential litigation against the IRS flow back to the federal government rather than to beneficiaries.

What the text implies

• The bill creates a perverse incentive: the President could file suits against the IRS knowing settlement proceeds will be entirely captured by the federal government, potentially encouraging frivolous or retaliatory litigation.
• The 100% tax rate is confiscatory and unprecedented in U.S. tax law; it effectively nullifies any settlement benefit to recipients, raising constitutional takings and due process questions not addressed in the bill.
• The exclusion of settlement payments from gross income (subsection c(2)) combined with the 100% tax creates a technical oddity: recipients owe tax on money not counted as income, which may create administrative confusion and litigation risk.
• The bill targets a specific category of litigation (President v. IRS) rather than settlement funds generally, suggesting it is a response to a particular anticipated lawsuit rather than a principled tax policy.
• If the President files a settlement lawsuit against the IRS and settles it, the bill ensures no private party benefits—all proceeds revert to the federal government, concentrating power over dispute resolution outcomes.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Ordinary citizens who receive settlement payments from a lawsuit the President files against the IRS would lose 100% of those payments to this tax. This is a direct financial cost to individuals who might otherwise benefit from a civil settlement, and it creates a perverse incentive structure where the President could file suits against the IRS knowing that any settlement proceeds would be entirely captured by the federal government rather than reaching the intended beneficiaries.

Who stands to gain

• U.S. federal government (100% of settlement proceeds)

Named in the bill

President of the United States, Internal Revenue Service (IRS), Internal Revenue Code of 1986, Subtitle D (Tax Provisions), Chapter 50B (new), Section 5000E (new)

Where it stands

• May 29, 2026 — Introduced · Congress.gov: “Introduced in House”
• May 29, 2026 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.