The 2026 Billionaire Tax Act: Following Your Wealth

Relocating from California has long been a strategy for wealth preservation, but what if the state tries to follow you across state lines? That is the crux of the controversy surrounding California’s proposed 2026 Billionaire Tax Act. This ballot initiative proposes a one-time 5% levy on the worldwide net worth of billionaires who claim California residency as of January 1, 2026.

Supporters claim this will fund critical healthcare and social programs. However, at Sullivan & Company CPA Inc., we closely monitor how such aggressive proposals impact high-net-worth families, trusts, and estate planning strategies. If approved for the November 2026 ballot, the measure would target individuals and trusts with a net worth exceeding $1 billion, capturing worldwide assets based on a specific residency benchmark.

The California Legislative Analyst’s Office (LAO) estimates it could raise tens of billions. Yet, the LAO cautions that this could trigger a mass exodus of capital, permanently reducing ongoing state income tax revenues by hundreds of millions annually.

Federal Pushback: The Keep Jobs in California Act

To counter this potential state overreach, U.S. Representative Kevin Kiley (R-CA) introduced the Keep Jobs in California Act (H.B. 7619). This federal legislation seeks to block states from imposing retroactive taxes on the assets of nonresidents for periods preceding the law’s enactment. It essentially targets post-departure wealth taxation, ensuring that once you sever ties with a state, your assets are protected from retroactive claims.

Legal and Valuation Complexities

Retroactive wealth taxation introduces severe constitutional hurdles. Attempting to tax the worldwide assets of former residents raises issues concerning Due Process, the Commerce Clause, and the fundamental right to travel. California already enforces stringent, complex residency audits examining domicile and intent.

Adding a retroactive wealth tax would undoubtedly spark fierce litigation over valuation controversies and jurisdictional authority.

Protecting Your Legacy in a Volatile Landscape

With competing ballot measures also in play—ranging from higher voter thresholds for new taxes to protections for personal savings—the landscape for high-net-worth tax planning is highly volatile. Residency is no longer just about where you receive your mail; it dictates the vulnerability of your entire financial legacy.

Need clarity on how your residency status impacts your estate and tax exposure? Contact Sullivan & Company CPA Inc. in Burlingame, CA, to discuss strategic wealth preservation, complex gift transactions, and residency compliance today.