Proposition 42
The Retirement and Personal Savings Protection Act of 2026
What is it?
Prop 42 bans two kinds of new state taxes: taxes on simply owning retirement holdings and other personal savings, and retroactive taxes that reach back to before they took effect.
The ownership ban covers retirement accounts, investments, and essentially everything else a person can own. It blocks taxes on simply owning these things; earning, selling, or withdrawing money can still be taxed, so income and capital gains taxes are unchanged. Taxes already on the books before 2026 are untouched.
The retroactive ban means a new state tax could not reach back and bill you based on conduct, activities, or a status (including where you lived) from before it took effect. Both bans cover any state law or constitutional provision enacted on or after January 1, 2026, including statewide initiatives on the same ballot as Prop 42 itself.
Competing measure
Prop 40, on this same ballot, would impose a one-time 5% tax on the net worth of Californians worth $1B or more. Under Prop 42's conflicting measures clause, a same-ballot initiative that taxes the ownership of these assets, or taxes conduct or status from before its effective date, is deemed in conflict. If Prop 42 gets more yes votes, all provisions of the other measure become null and void.
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Fiscal impacts
Prop 42 does not raise or spend money on its own. The Legislative Analyst's Office found that the measure "restricts the options the state and local governments have to raise taxes in the future," which "could reduce future tax revenues," but "when and by how much future revenues would be reduced is unclear." Because California does not currently tax the ownership of financial assets, the LAO identified no immediate revenue loss.
Why is this on the ballot?
Prop 42 is a citizen initiative. Backers gathered voter signatures to qualify it for the November 3, 2026 ballot.
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: The campaign is Californians to Protect Retirement and Life Savings, sponsored by Building a Better California, a pro-business group co-founded by Google co-founder Sergey Brin and former Google CEO Eric Schmidt. Building a Better California was the committee's sole funder through the March 31, 2026 filings, and the group qualified more than one statewide measure aimed at the competing billionaire wealth tax (Prop 40).
- Attorney General file number: 25-0041A1, amended language submitted January 12, 2026.