Proposition 40
The 2026 Billionaire Tax Act
What is it?
Prop 40 is a one-time 5% tax on the net worth of California residents worth $1B or more, for the 2026 tax year only. It also taxes certain trusts a billionaire has put property into. All persons who were residents of California as of January 1, 2026 are subject to the tax.
The tax phases in at net worths between $1B and $1.1B, and applies to the entire net worth so it is not a progressive tax. A married couple counts as one person.
Every California resident filing a 2026 state tax return must declare that their net assets were $1B or less, or else file the wealth tax forms.
What counts as net worth
Everything the taxpayer and their spouse own worldwide, minus debts, except real estate, retirement accounts, up to $5M of art, or other property outside California, unless moved to dodge the tax.
Where the money goes
Revenue goes into a new fund held outside the General Fund, exempt from the state spending limit. It is split 90% to health care (Medi-Cal and other coverage for low- and moderate-income people) and 10% to K-14 education and food assistance (CalFresh and school meals).
Read the full annotated legal text →
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The tax can be paid at once or over five years, with a 7.5% yearly charge on the unpaid balance. The money cannot replace existing spending on the funded programs. A taxpayer whose bill exceeds all their publicly traded assets can defer by pledging hard-to-sell assets to the state under a contract that binds them after leaving California. Facial challenges must be filed within 60 days of the election, with appeal straight to the California Supreme Court.
Fiscal impacts
The measure's findings say California has around 200 billionaires with roughly $2 trillion in combined wealth; the legal text contains no revenue estimate. In its fiscal analysis, the Legislative Analyst's Office estimates the one-time tax "probably would add up to tens of billions of dollars" collected over several years starting in 2027, expects an ongoing decrease in state income tax revenue of hundreds of millions of dollars or more per year as some billionaires leave the state, and puts administrative costs in the tens of millions of dollars per year.
Why is this on the ballot?
This is a citizen initiative, filed with the Attorney General as Initiative No. 25-0024 and qualified by voter signatures. It amends both the Constitution and the Revenue and Taxation Code.
According to Article II, Section 8 of the California Constitution, amendments to the California Constitution may be introduced by collecting signatures (8% of the votes cast in the most recent Governor's race). The amendment must then be approved by voters with a simple majority of 50% + 1.
- Placed on ballot by: Voter signature petition.
- Sponsor: SEIU United Healthcare Workers West (SEIU-UHW), the labor union that filed and funded the measure.
- Proponent: Suzanne Jimenez, chief of staff at SEIU-UHW.