Imposes One-Time Tax on Certain Taxpayers
Creates a one-time tax of up to 5% on the net worth of certain California billionaires and directs the proceeds to health care, education, and food assistance.
The measure would create a new state tax for California residents with at least $1 billion in net worth as of January 1, 2026, with taxable wealth measured on December 31, 2026. The Legislative Analyst estimates the tax probably would raise tens of billions of dollars over several years and could reduce ongoing state income-tax revenue by less than $1 billion per year.
What it does
- Imposes a one-time tax of 5% on covered net worth of California residents and certain trusts with at least $1 billion in net worth, with a lower rate for individuals below $1.1 billion.
- Allows taxpayers to pay with their 2026 income-tax filing or in five annual installments, with a 7.5% annual charge on the unpaid balance.
- Counts worldwide covered assets, including business interests, securities, art, collectibles, intellectual property, and other personal property, less permitted debts and liabilities.
- Excludes directly held real property, most pensions and retirement accounts, certain out-of-state tangible property, and up to $5 million in specified other assets.
- Places revenue, interest, and penalties in a dedicated fund after administrative costs, with 90% for health care and 10% for kindergarten through grade 14 education and food assistance.
- Bars the state from using the money to reduce, replace, or avoid increases in other state funding for health care, education, or food assistance.
- Exempts the revenue from constitutional school-funding requirements, state budget-reserve rules, and the state spending limit.
Who it affects
- California residents on January 1, 2026, whose covered net worth is at least $1 billion when measured on December 31, 2026.
- Certain trusts that received property from an applicable California billionaire.
- Health care providers and people using health coverage, education, and food-assistance programs that could receive appropriations from the dedicated fund.
- The Franchise Tax Board, which would administer, value, audit, and collect the tax.
Context
California currently taxes income but does not impose this one-time tax on an individual's net worth. Existing constitutional rules generally govern school funding, budget reserves, and the state spending limit. This measure would exclude its revenue from those rules.
A yes vote means
A yes vote would create a one-time tax of up to 5% on covered net worth of certain California billionaires and dedicate the resulting revenue, after administrative costs, primarily to health care and otherwise to education and food assistance.
A no vote means
A no vote would leave in place current law, under which California does not impose this one-time tax on the net worth of billionaires or create this dedicated revenue fund.
Fiscal effect
The Legislative Analyst's Office estimates:
- Temporary state revenue increase from a new wealth tax on billionaires. These wealth tax revenues probably would add up to tens of billions of dollars spread over several years.
- Possible ongoing decrease of less than $1 billion per year in state income tax revenue collected from billionaires.