California Billionaire Tax: Prop 40 and Residency
Quinn Moran · October 6, 2026
Proposition 40 is a proposed one-time California tax of 5% of net worth on billionaires who were California residents on 1 January 2026. It is on the 3 November 2026 ballot; if it passes, the Legislative Analyst's Office says the tax would be due in 2027, could be spread over five years at extra cost, and would generally exclude real estate, pensions and retirement accounts. Because the residency date has already passed, moving now does not change who it covers. The live question is proving where you were resident on that date.
On this page
California voters decide on Proposition 40 on 3 November 2026. Most coverage calls it the billionaire tax. For anyone near the line, the detail that matters most is a date that has already passed: 1 January 2026.
This post sets out what the official sources say about the measure and why residency on a single past date is the question it turns on. It is not a forecast of the vote. For California's residency rules in general, see the California tax residency guide.
What Proposition 40 would do
The Secretary of State lists Proposition 40 as an initiative constitutional amendment and statute, titled "Imposes One-Time Tax on Certain Taxpayers." The Legislative Analyst's Office (LAO) analysis summarises it like this:
| What the LAO says | |
|---|---|
| Who pays | Billionaires who were California residents on 1 January 2026 |
| Amount | A one-time tax of 5% of net worth |
| When due | 2027, with an option to spread payments over five years at extra cost |
| Generally excluded | Real estate, pensions and retirement accounts |
| Where the money goes | 90% to health care services; the rest to education, food assistance and running the tax |
| Possible conflict | If Proposition 41 or 42 gets more yes votes, courts could find a conflict and stop Proposition 40 |
The LAO expects the tax to raise tens of billions of dollars over several years, and says it is hard to predict, partly because billionaires may take steps to reduce what they owe, including leaving California. It estimates a possible ongoing loss of less than $1 billion a year in state income tax from that.
Why 1 January 2026 is the whole question
Most taxes look forward: change where you live and next year's bill changes. Proposition 40, as the LAO describes it, looks back. It applies to people who were residents on a date that is already in the past on election day.
That has two consequences.
- A move made after 1 January 2026 does not change coverage. Leaving California now may matter for future income tax, but not for this measure if it passes.
- A move made before 1 January 2026 has to hold up. Someone who left in 2025 is outside the measure only if they had actually stopped being a California resident by that date. A 2025 move that the Franchise Tax Board later treats as incomplete would bring that person back in.
So the practical question for anyone affected is not "should I move?" but "can I show where I was resident on 1 January 2026, and in the months before it?"
How California decides residency
California has no 183-day bright line. Under Revenue and Taxation Code section 17014, you are a resident if you are in California for other than a temporary or transitory purpose, or if California is your domicile and you are away only for a temporary or transitory purpose. The Franchise Tax Board weighs where your closest connections are: home, family, business, accounts, licences, and where you actually spent your time. Our California guide covers the presumptions and the factors in detail.
In a residency review, the FTB rebuilds the calendar from third-party records, as described in leaving California: how the FTB tracks you down. For a residency date that has already passed, that record is fixed. What you can still do is gather it: travel records, the closing date on the California home, the start of the new lease or purchase, and a day-by-day record of where you were in late 2025 and early 2026.
The measure's own text sets the detailed definitions (including how it defines a resident and a billionaire). Read it, or have your adviser read it, before relying on any summary, this one included.
Not only a California story
Proposition 40 is the newest of several state measures aimed at very high earners or very large fortunes. Massachusetts has had a 4% surtax on income above a threshold since 2023 (Massachusetts millionaires tax 2026), and Washington has its own 9.9% millionaires' tax. The common thread is that each one makes the residency question more expensive, and each one is decided by records of where you lived and spent your days.
Where iReside fits
A residency date in the past can only be proved with records made at the time. iReside makes that record going forward: it runs in the background on your iPhone and records which state and country you were in each day by GPS, with nothing to log by hand, and exports an audit-ready PDF report your adviser can use. If you are planning a move, you can track the state you are leaving and see Planned vs Actual days for the rest of the year. Check a year with the free 183-day calculator.
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