On November 3, Californians will vote on Proposition 40. The proposal, dubbed the 2026 Billionaire Tax Act, would put in place a one-time tax on high-wealth state residents as well as certain trusts.

Individuals and certain trusts worth $1 billion or more would be subject to an excise tax of up to 5%. Importantly, the tax would apply to those who were California residents as of January 1, 2026. Meanwhile, net worth would be determined as of a set asset “valuation date” — December 31, 2026.

The ballot initiative would require California resident individuals to, when filing their 2026 tax return, declare that their net assets were worth “less than or equal to” $1 billion as of the valuation date. California residents subject to the tax also would need to submit a declaration of the amount of tax owed, along with supporting appraisals or evidence of fair market value used in their calculations.

To dig deeper, visit the original article on the Thomson Reuters blog.