California Voters - What Tax Initiatives are on your ballot?

CALIFORNIA STATEWIDE TAX PROPOSALS IN NOVEMBER

Proposition 3: Extension of Personal Tax Rates

 The proposition would make permanent the 3 highest rates of 10.3%, 11.3% and 12.3%. The result is a top marginal income tax rate of 13.3% when combined with the state's permanent 1% mental health tax on income over $1 million.

These rates began in 2012 and are effective through 2031. If these rates expired the highest bracket would be 9.3%.

According to the Legislative Analyst’s Office summary, the tax only applies to the top 2% of California taxpayers, who pay about half of all state income taxes.

Note: CA’s 12.3% tax used to be the highest in the nation until Hawaii added a 13% tax bracket for millionaires.  New York, New Jersey and DC are the other states that have brackets over 10%.

The 2025 tax rates had the 9.3% bracket ending at $371,479 single and $742,958 joint.

Proposition 40: Billionaire Tax

The proposal impose a one-time 5% tax on the net worth of individuals (and certain trusts) with a net worth of $1 billion or more who are California residents as of January 1, 2026. This tax would be retroactive which is why so many tax experts believe it would be declared invalid by a court.

The amount of the tax would be based on December 31, 2026 net worth.

Billionaire taxes would be allocated 90% for health care expenses (primarily Medi-cal) and 10% for food assistance (such as Calfresh or free school meals) and education-related programs.

Note: If measures approved at the same election conflict, the measure receiving the highest number of votes prevails over the lower voted measure. This means that if either Proposition 41 or 42 receives more votes than Proposition 40, the billionaire tax would not take effect.

Proposition 41: Prohibit Excluding New State Taxes from Spending Limit and Require Special Tax Audits Initiative

If passed, this law would require:

1.     The preparation of a pre-election financial and performance audit of each of the program(s) that would receive moneys from the special tax.

2.     For all special taxes enacted by the Legislature or by a statewide initiative measure on or after January 1, 2026, the California State Auditor shall conduct ongoing financial and performance audits of each program that receives moneys from the special tax.

3.     No state tax that is enacted or takes effect on or after January 1, 2026 shall be exempted or excluded from the Government Spending Limitation. This would apply to the billionaire tax measure and thus would invalidate the Billionaire Tax.

Proposition 42:  Prohibit New Taxes on Retirement Holdings, Personal Assets, and Savings and Limit Retroactive Taxes Initiative

 If passed, this law would eliminate the billionaire tax as it would require:

1.     No state law and no provision of this Constitution enacted on or after January 1, 2026 may enact, create, impose, or authorize collection of a tax on the ownership or control of retirement holdings, individually-owned assets, and other forms of personal savings, whether held directly or indirectly.

2.     (No retroactive taxes) No state law and no provision of this Constitution enacted on or after January 1, 2026 may enact, create, impose, or authorize collection of a tax that operates retroactively to result in tax liability based on conduct, activities, or a status that occurred or was present prior to the effective date of the state law or constitutional provision.

Proposition 43: Tax Voting Approval

The proposal would restrict voters’ ability to approve certain local revenue measures by increasing the approval threshold for voter-proposed local special taxes (that are dedicated for a specific purpose) from a simple majority to two-thirds. In charter cities, the proposal prohibits voters from approving real estate transfer taxes other than the existing 0.11% real estate transfer tax.

The proposal overturns all existing voter-approved property-related taxes, including real estate sales and transfer taxes, that do not comply with these requirements two years after the measure is enacted.

Currently, the two-thirds vote requirement only applies to local special tax initiatives placed on the ballot by a governmental body, as opposed to by voters collecting signatures to qualify for the ballot which only require a 50% approval.