Wealth Tax Proposals by State: What's Coming

California nearly passed a wealth tax in 2024. It didn't. Now similar proposals are back in Sacramento and spreading to at least five other states, targeting not just billionaires but households with assets well above $1 million.

What a Wealth Tax Actually Is

A wealth tax is an annual levy on net worth, not income. That distinction matters enormously. Under most state proposals, you owe tax even if your assets produced zero cash income that year, which means paying taxes by selling stock, real estate, or business equity.

California's 2026 proposal, backed by Assembly Democrats, would impose a 1% annual tax on net worth above $50 million and 1.5% above $1 billion. The state's own Franchise Tax Board estimated a similar 2024 bill could generate $21.6 billion annually at full implementation. Critics note the board also projected significant taxpayer departures that would erode that figure substantially within five years.

This is distinct from higher income tax rates, which California already leads the nation on at 13.3% for income above $1 million (as of late 2025, with no reduction enacted for 2026). A wealth tax stacks on top of that.

States With Active Proposals Right Now

California gets the headlines, but it is not alone. Here is where legislation stood as of May 2026:

California: Assembly Bill under committee review, 1% on net worth above $50 million. A companion provision would apply a reduced exit tax on assets for residents who leave the state within 10 years of the law's passage. That exit tax provision has drawn the most legal scrutiny.

New York: A 1% annual tax on unrealized capital gains above $1 billion was introduced in the state legislature in early 2026. New York already has a combined state and city income tax burden exceeding 14.7% for high earners in New York City.

Washington: The state passed a capital gains tax in 2022 and a billionaire income tax proposal advanced in committee in early 2026. Washington has no broad income tax, so the political path is complicated.

Illinois: A graduated wealth surcharge proposal targeting households above $100 million is in early legislative drafting. Illinois already carries a flat 4.95% income tax rate.

Connecticut and Minnesota: Both have introduced bills in 2026 that would increase effective tax rates on unrealized gains for the top 0.1% of households, stopping short of a formal wealth tax label but achieving a similar result.

None of these have passed as of publication. But the direction is clear.

The Migration Problem States Are Ignoring

IRS migration data for tax year 2023, the most recent available, showed California lost a net $23.8 billion in adjusted gross income to other states. Florida and Texas were the top destinations. That was before any wealth tax passed.

A 2024 study from the Hoover Institution estimated that a 1% annual wealth tax in California would trigger departures by roughly 30% of affected households within three years, primarily to Nevada, Texas, Florida, and Wyoming, all states with no income tax and no wealth tax proposals on the table.

The math is straightforward. A household with $100 million in net worth pays $1 million per year under California's proposed rate. Moving to Nevada, which has no income or wealth tax, eliminates that bill entirely. The cost of relocating is a one-time event. The savings compound annually.

For a deeper look at how this plays out in practice, see our breakdown of The True Cost of Living in High-Tax States and our Florida vs. California: The Tax Reality comparison.

What This Means If You Have Wealth Below Billionaire Level

Most current proposals target net worth above $50 million. That is a small slice of the population. But thresholds have a history of drifting downward once the framework exists, the same pattern seen with the Alternative Minimum Tax, which Congress designed for the ultra-wealthy in 1969 and which hit millions of middle-class households before reform in 2017.

If you are in the $1 million to $10 million range, your more immediate concern is estate tax exposure and capital gains treatment. Our Estate Tax by State: Where Your Heirs Pay Most post covers the current thresholds in detail. Our Capital Gains Tax by State: A Full Breakdown shows where unrealized gains already face elevated treatment.

Key Takeaways

• California's 2026 wealth tax proposal sets rates at 1% above $50 million and 1.5% above $1 billion, with a contested exit tax on departing residents.
• At least five states have active wealth tax or billionaire tax legislation in 2026, with none passed as of May.
• IRS data shows California lost $23.8 billion in adjusted gross income to other states in 2023 alone, before any wealth tax took effect.

Use our state tax calculator to see exactly what you would owe under current and proposed rules in any state, and compare your options side by side.