Billionaires Defeat Wealth Tax in California, but Income Tax Hikes Prevail Across US States

During the 2026 midterm elections, state-level efforts to tax high earners yielded mixed results as wealthy opponents deployed nearly $400 million to defeat California's Proposition 40. That heavily publicized ballot initiative aimed to levy a one-time 5% tax on the net worth of roughly 200 billionaires in the state, drawing significant financial pushback from figures like Google co-founder Sergey Brin before ultimately failing at the ballot box.

Despite the defeat of direct wealth taxes, strategies focusing on higher income taxes proved notably resilient across the country. Voters considered major income tax changes across five states, with all three ballot initiatives seeking to boost or preserve rates on the affluent passing successfully. In Washington state, voters protected a newly enacted 9.9% tax on household incomes exceeding $1 million. Meanwhile, Colorado voters rejected a flat tax cap while approving a graduated structure raising rates on incomes above $500,000.

California voters themselves endorsed Proposition 3, securing permanent high-earner income tax surcharges starting at 10.3% for incomes above $360,000 and reaching 12.3% for those surpassing $721,000. Lawmakers in states such as Maine, Hawaii, and Rhode Island also established new brackets or surcharges targeting millionaires earlier in the year. Beyond income measures, state and local governments increasingly targeted secondary properties, implementing tiered property taxes on vacation homes and luxury second residences in places like Montana.

What to watch next: Monitor upcoming state legislative sessions for new proposals targeting high-net-worth individuals and potential legal challenges against newly enacted millionaire tax brackets.