The conversation surrounding wealth taxation is reaching a tipping point across the United States. High-net-worth individuals and families are facing a wave of new legislative efforts aimed at increasing tax contributions from top earners, luxury property owners, and billionaires. These revenues are typically earmarked for infrastructure, education, and closing budget gaps, but the impact on wealth preservation and estate planning remains a primary concern for our clients at Sullivan & Company CPA Inc. in Burlingame.

The current landscape is a mix of enacted laws, pending ballot measures, and stalled proposals. Here is a detailed status report on the most significant millionaire and wealth tax initiatives across the country as of mid-2026.

The California Landscape: Billionaire Tax Act Potential

In our home state, the debate over wealth taxation is intensifying. Advocates for the 2026 Billionaire Tax Act have successfully gathered the signatures required to place a significant one-time 5% wealth tax on the November 2026 ballot. This measure targets individuals with a net worth exceeding $1 billion, with the potential to generate tens of billions for healthcare initiatives. While supporters argue this offsets federal funding shifts, many in the Silicon Valley tech sector and state leadership express concern regarding the potential for high-net-worth outward migration.

Maine: New Income Surcharge Enacted

Maine has officially joined the ranks of states with targeted millionaire taxes. Governor Janet Mills recently signed a budget including a 2% surcharge on individual income over $1 million ($1.5 million for joint filers). Crucially, this tax is retroactive to January 1, 2026, requiring immediate attention for those with multi-state income sources or residency in the Northeast.

Illinois: Stalled Proposals for 2026

In Illinois, a high-profile push for a constitutional amendment that would have enabled a 3% tax on income over $1 million has stalled in the House. This failure to gain legislative traction means Illinois voters are unlikely to see this specific measure on the ballot this November, offering a temporary reprieve for high earners in the state.

New York: Targeting Luxury Second Homes

New York is shifting its focus toward real estate assets rather than pure income. A proposed pied-à-terre tax would target second homes in New York City with a valuation of $5 million or more. For our clients with bicoastal property holdings, this surcharge represents a new annual cost of ownership for ultra-luxury investments.

Washington: High Income Tax Facing Litigation

Washington state has enacted a 9.9% tax on income exceeding $1 million, scheduled to take effect in 2028. However, the law is already facing significant legal challenges. Opponents argue the tax violates the state’s constitutional treatment of income as property, creating a period of uncertainty for high-income residents planning their long-term residency.

Massachusetts: The Fair Share Amendment in Practice

Massachusetts remains a key test case with its existing 4% surtax on taxable income above $1 million. Since its implementation in 2023, the Fair Share surtax has generated substantial revenue for education and transportation, though economists continue to monitor its effect on high-earner migration patterns.

Oregon & Vermont: Wealth and High-Bracket Proposals

Oregon may soon see The Very Rich Pay Their Fair Share Act on the ballot, which would tax assets like stock options and business interests. Meanwhile, Vermont lawmakers are debating a top income tax bracket of 13.3% on income over $586,000, potentially creating one of the highest rates in the country.

Connecticut, Maryland, & Rhode Island: Targeted Wealth Taxes

Advocacy groups in Connecticut are actively pushing for a billionaire tax, while Maryland’s House Bill 1238 seeks a tax on net worth over $1 billion. Rhode Island has taken a specific approach with the so-called “Taylor Swift Tax,” a 0.5% surcharge on non-owner-occupied homes valued over $1 million, effective July 2026.

New Jersey & Hawaii: Mansion Taxes and Stalled Hikes

New Jersey has already expanded its tiered mansion tax, with sales over $3.5 million taxed at 3.5%. In contrast, several high-end tax hikes in Hawaii, including property taxes on homes over $4 million, have stalled in the state Senate for the current session.

Federal Landscape: The Ultra-Millionaire Tax Act

At the federal level, the Ultra-Millionaire Tax Act has been reintroduced, proposing a 2% annual tax on net worth over $50 million. While political hurdles are significant, its continued presence in the debate signals a long-term interest in federal wealth taxation.

The Impact on Your Financial Legacy

The definitions of a “millionaire tax” are broad, encompassing income surcharges, wealth taxes, and luxury property surcharges. For high-net-worth families, these changes necessitate a proactive approach to estate planning, gift tax strategies, and valuation. Because these policies are evolving rapidly, we recommend a review of your current asset structure to ensure your legacy remains secure against shifting state mandates.

As tax legislation moves quickly, please note this information is current as of April 29, 2026. If you are concerned about how these new taxes might impact your estate or business interests, schedule a consultation with our Burlingame team today.

Beyond the legislative headlines, the practical implementation of these taxes introduces a layer of complexity that often goes overlooked in the public debate: the necessity of precise asset valuation. For the proposals in states like Oregon or the potential billionaire tax in California, the challenge lies in defining what constitutes wealth on a specific date. Unlike publicly traded stocks with a daily ticker price, assets such as private equity holdings, family-owned businesses, and specialized real estate portfolios require a formal valuation by qualified professionals. This is where the intersection of accounting and forensic analysis becomes critical. A defensible result is not just a goal; it is a requirement for anyone operating in this high-stakes tax environment.

We are seeing an increase in what we call valuation friction, where state tax authorities challenge the discounts applied to minority interests or the lack of marketability in private entities. For families who have spent decades building a legacy, these new tax measures could inadvertently trigger audits simply because the state disagrees with how a private asset was appraised. This is why our focus on valuation methodologies is so central to the planning process. By utilizing robust, tech-forward methodologies, we help clients build a fortress of documentation that can withstand the scrutiny of state revenue departments. In an era of heightened enforcement, having a clear, data-driven narrative for every valuation position is the best defense against protracted litigation and unexpected tax liabilities.

Another significant factor arising from this movement is the rise of residency and domicile audits. As states like Washington and Maine implement higher surcharges, we anticipate a surge in exit audits. When a high-net-worth individual moves their primary residence to a lower-tax jurisdiction, states often scrutinize the timing and intent of the move. Forensic accounting plays a vital role here, helping to reconstruct timelines, analyze spending patterns, and document the statutory residency factors that prove a change in domicile. For our clients in Burlingame and the surrounding Bay Area, navigating these sticky residency rules is just as important as managing the tax rate itself. It requires meticulous record-keeping and a proactive strategy that begins long before a move is actually executed to ensure compliance and avoid costly disputes.

Generational wealth transfer also faces new headwinds under these proposals. Traditional gifting strategies often rely on the gradual transition of assets to the next generation to minimize estate tax exposure. However, if annual wealth taxes become a reality, the math behind these transfers changes fundamentally. Families may need to accelerate their gifting programs or restructure their entities to account for an ongoing tax on net worth rather than a one-time event. This shifts the focus from periodic estate planning to an annual compliance and valuation cycle. Managing this requires a coordinated effort between legal counsel, wealth managers, and tax advisors to ensure that the strategy remains aligned with the family’s long-term objectives and legacy goals while mitigating the annual tax drag on the portfolio.

For family offices, the administrative burden of these millionaire taxes cannot be overstated. Tracking the cost basis of assets, monitoring changes in state-level thresholds, and managing the cash flow required to pay annual surcharges on non-liquid assets creates a significant operational challenge. We often see families struggling with phantom income issues—situations where a tax is owed on an asset’s appreciation even though the owner hasn’t sold it yet and has no cash proceeds to cover the bill. This liquidity squeeze can force the sale of assets that were intended to be held for generations. Strategic planning must now include liquidity stress tests to ensure that tax obligations do not compromise the integrity of the overall investment strategy or the family’s financial security.

Finally, the role of forensic accounting in litigation support is expanding as these taxes are increasingly challenged in court. Whether it is a dispute over the valuation of a business in a divorce proceeding or a controversy with the state over the characterization of income, the need for clear, expert testimony is paramount. Our team focuses on simplifying these complex issues into actionable strategies that a judge or tax authority can easily understand. In the current environment, being technically accurate is only half the battle; the other half is communicating that accuracy in a way that resolves disputes efficiently and preserves the client’s control over their financial legacy. As these tax movements grow, so does the value of having a trusted advisor who can navigate the intersection of tax law, valuation theory, and forensic investigation.