Prop 40 Explained: California Voters Decide a One-Time 5 Percent Tax on Billionaires on Tuesday
Proposition 40, the 2026 Billionaire Tax Act, is trending in searches on election eve — a one-time 5 percent tax on Californians who were residents on January 1 and worth $1 billion or more, with 90 percent of the money directed to health care, and two competing measures that could block it even if it passes.
Proposition 40, formally the 2026 Billionaire Tax Act, would impose a one-time California tax equal to 5 percent of net worth on billionaires who were residents of the state on January 1, 2026, according to the nonpartisan Legislative Analyst's Office analysis of the measure. The tax would be due in 2027, and taxpayers could spread payments over five years at a higher total cost. Real estate, pensions and retirement accounts generally would be excluded from the calculation.
The Legislative Analyst estimates the measure would raise tens of billions of dollars in one-time revenue, collected over several years, and 90 percent of the money would have to be spent on health care services for the public. Published explainers read by this desk put the number of affected taxpayers at roughly 200, and the rate phases in between $1 billion and $1.1 billion of net worth, measured on December 31, 2026.
Two competing measures on the same ballot, Propositions 41 and 42, each contain language under which a higher yes vote for one of them could be read by courts as conflicting with and blocking Proposition 40 even if Proposition 40 itself passes. Los Angeles County voters will find Proposition 40 among the 14 statewide propositions on Tuesday's ballot; vote centers are open Monday from 10 a.m. to 7 p.m. and on Election Day from 7 a.m. to 8 p.m.
