California, October 25, 2025
News Summary
California has proposed a one-time 5% tax on residents with a net worth over $1 billion to combat a projected $30 billion healthcare funding shortfall. Known as the ‘2026 Billionaire Tax Act’, 90% of the revenue would go to healthcare and 10% to K-12 education. This unprecedented measure targets approximately 180 billionaires in the state and aims to address economic disparity while requiring significant voter support to qualify for the ballot in November 2026.
California has introduced a proposal to impose a one-time, 5% tax on residents with a net worth exceeding $1 billion. Known as the “2026 Billionaire Tax Act,” the bill aims to address an anticipated $30 billion annual shortfall in health care funding due to projected federal funding cuts. If the proposal is successful, it will be presented to voters on the November 2026 ballot, contingent upon collecting nearly 875,000 signatures to qualify.
Ninety percent of the generated tax revenue is intended for health care initiatives, while the remaining 10% will be allocated to K-12 public education. The revenue will be limited to a maximum of $25 billion per year, deposited into a separate account termed the “Billionaire Tax Reserve Account.” The proposal argues that the wealth of billionaires has “largely escaped fair taxation,” contributing significantly to growing economic disparity within the state.
All California residents subject to this tax will be required to declare their total net worth, including assets from private companies, real estate, and personal collections such as art. Tax payments can either be made in full at the time of assessment or spread over five years with interest. Individuals who underreport their assets would incur severe penalties.
Currently, California is home to approximately 180 billionaires, whose combined wealth is estimated at $2 trillion. The bill was developed with the assistance of UC Berkeley economics professors and has garnered support from the Service Employees International Union. Advocates for the tax assert that it is a modest approach compared to the substantial increases in wealth experienced by billionaires.
Opponents of the tax fear that it may prompt wealthy individuals to relocate to states with lower tax rates, which could lead to reduced investments in California. Critics also warn that the initiative may create compliance issues for financial advisors managing the finances of affected individuals and could potentially harm the state’s entrepreneurial environment and capital investment climate.
The initiative reflects a broader trend toward taxing extreme wealth at both state and potentially federal levels. Research indicates that non-billionaire Californians pay an average of 6% more of their economic income in taxes compared to wealthy individuals. The California Attorney General’s office is expected to provide a formal title and summary of the initiative in the coming weeks. If enacted, California would become the first U.S. state to implement a direct wealth tax on billionaires.
This proposal is positioned as a solution to bolster state revenue without imposing additional tax burdens on working and middle-class residents, aiming to alleviate the looming healthcare funding crisis.
Frequently Asked Questions
What is the purpose of the 2026 Billionaire Tax Act?
The purpose of the 2026 Billionaire Tax Act is to levy a one-time, 5% tax on California residents with a net worth exceeding $1 billion to address an anticipated $30 billion annual shortfall in health care funding.
How much of the tax revenue is allocated to health care versus education?
Ninety percent of the new tax revenue would be allocated to health care, while 10% would be directed to K-12 public education.
How many billionaires reside in California?
Approximately 180 billionaires are currently estimated to reside in California, holding approximately $2 trillion in combined wealth.
What are the payment options for the tax?
Tax payments can be made in full or spread over five years with interest, and underreporting would incur steep penalties.
When could voters potentially see this measure on the ballot?
If approved, the initiative could be placed on the November 2026 ballot.
| Key Features | Details |
|---|---|
| Tax Rate | 5% one-time tax on billionaires’ wealth |
| Primary Use of Revenue | 90% for health care; 10% for K-12 education |
| Revenue Cap | Maximum of $25 billion annually |
| Signature Requirement | Approximately 875,000 signatures needed to qualify |
| Number of Billionaires Affected | About 180 billionaires in California |
Deeper Dive: News & Info About This Topic
- Investment News: California’s Proposed Billionaire Tax
- Wikipedia: Wealth Tax
- Bloomberg: California Billionaires Face Proposed 5% Tax
- Google Search: California Billionaire Tax
- Wall Street Journal: California Wealth Tax Bill
- Encyclopedia Britannica: Taxation
- Los Angeles Times: Efforts to Tax Extreme Wealth in California
- Google News: California Wealth Tax
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