California’s proposed 2026 Billionaire Tax Act is a one-time wealth tax that voters will decide in November 2026. If you have a net worth at or above $1 billion and any connection to California, the proposal deserves your attention now. Below are frequently asked questions about what the tax does, who is subject to it, and the potential future tax landscape in California.
Frequently asked questions
The proposal applies to California residents (determined as of January 1, 2026) with a net worth of $1 billion or more, measured as of December 31, 2026. Married couples are treated as a single taxpayer.
Not after the fact. Residency is fixed at the start of 2026, and the measure apportions the tax to California without reduction for leaving. Genuine, well-documented changes in the location and connection of wealth must be evaluated within the rules the measure provides.
Real property held directly or in a revocable living trust is excluded from net worth. Real estate held inside entities or certain irrevocable trusts generally is not, which is why ownership form deserves early review.
Your entire net worth is taxed. Unlike the estate tax, this measure has no exemption—the $1 billion figure only determines whether the tax applies. Once you are over the threshold (and above the narrow phase-in band that ends at $1.1 billion), the 5% is calculated on your whole net worth, not just the portion above $1 billion.
Possibly, but it should not be the basis of your plan. Challenges are likely if the measure passes, but the authors drafted it with features intended to survive them—including a rate phase-in, an alternative-apportionment mechanism, expedited judicial review, and severability and reformation provisions that direct courts to preserve the tax rather than strike it. There is a meaningful chance it withstands challenge, so prudent families should plan as if it will take effect while monitoring the litigation.
It depends on your situation, but timing matters. A sale completed within 2026 provides liquidity for the eventual payment and brings the associated federal and California income-tax cost into the 2026 tax year, whereas selling afterward can leave a fully valued asset in the valuation-date snapshot followed by a tax bill the next year. The precise interaction with the wealth-tax calculation is fact-specific and should be modeled with your advisors in advance.
The Billionaire Tax Act is a ballot measure subject to a vote and potential legal challenge. Prudent families should plan for the possibility while monitoring developments, because the most effective planning must occur before the valuation date regardless of the litigation timeline.
Read our deep-dive article on California’s Billionaire Tax Act here, and schedule an introduction with a Cerity Partners advisor today.
Please read important disclosures here.
