Learning Center
Can California Tax You After You Leave? The Billionaire Wealth Tax Fight Just Went Federal
What happens if a state tries to tax you — even after you’ve moved away?
That’s the question now driving a growing legal and political showdown over California’s proposed 2026 Billionaire Tax Act, a ballot initiative that would impose a one-time 5% tax on the worldwide net worth of billionaires who were California residents as of January 1, 2026.
Supporters argue it could raise massive revenue for healthcare and social programs. Critics warn it could trigger high-profile relocations, and potentially attempt to tax individuals who no longer live in the state.
Now, a federal bill aims to stop that from happening.
What the Proposed 2026 Billionaire Tax Would Do
Backers of the initiative are working to place the measure on California’s November 2026 ballot. If approved, it would:
Impose a one-time 5% excise tax
Apply to individuals or trusts with net worth of $1 billion or more
Use January 1, 2026 residency status as the benchmark date
Apply to worldwide assets
Revenue would primarily fund healthcare programs, with remaining funds allocated to education and food assistance.
According to information from the California Legislative Analyst’s Office (LAO), the tax could generate “tens of billions of dollars” over several years beginning in 2027. However, the LAO also warned the proposal could cause an ongoing reduction in state income tax revenue, potentially hundreds of millions annually, if affected individuals relocate.
The Federal Pushback: The Keep Jobs in California Act
In response, U.S. Representative Kevin Kiley (R-CA) introduced the federal bill, Keep Jobs in California Act (H.B. 7619).
The bill would prohibit any state from imposing a retroactive tax on a nonresident individual’s assets for any period before the tax was enacted if that individual no longer resides in the state.
In practical terms, Kiley described the proposed wealth tax as an “unprecedented attempt” to impose retroactive taxation on individuals who have already left the state.
Importantly, the federal bill does not prohibit states from taxing current residents. It focuses specifically on retroactive or post-departure asset taxation.
Why Retroactive Wealth Taxes Raise Legal Questions
Retroactive taxation is not new, but wealth taxes present distinct constitutional questions. Legal analysts have pointed to potential concerns involving:
Due Process protections
The constitutional right to travel
Commerce Clause limitations
The scope of state authority to tax worldwide assets
California already uses a complex residency test based on domicile, time spent in the state, and intent. Any attempt to tax former residents would likely face immediate legal challenges.
The Migration Risk
Thanks to the presence of industries like technology and entertainment, California relies heavily on high-income earners for a significant share of its revenue. The LAO analysis explicitly acknowledged that behavioral changes — including relocation — could reduce long-term income tax collections by hundreds of millions of dollars annually.
That tension is central to the debate: short-term revenue gains versus potential long-term tax base erosion.
Competing Ballot Measures Add Complexity
Multiple additional initiatives have been filed that could complicate or counteract the 2026 Billionaire Tax Act if they qualify for the ballot. These include proposals that would:
Raise the voter threshold to two-thirds for new one-time taxes
Prohibit new taxes on personal savings and retirement assets
Clarify residency rules for nonresidents and part-time residents
Increase fiscal transparency measures
The proposed California billionaire wealth tax, and the federal Keep Jobs in California Act designed to counter it, represent a direct confrontation between state revenue authority and constitutional limits.
If the ballot initiative advances and the federal bill gains traction, this could become one of the most closely watched state tax disputes in recent history.
For taxpayers, the takeaway is straightforward: Residency is not just a mailing address. It can determine whether your wealth is taxable, even after you move.
NEVER MISS A STORY.
Sign up for our newsletters and get our articles delivered right to your inbox.
Rose Tax & Financial
Cedar Crest, New Mexico 87008
Sat: 10:00am to 2:00pm
Check the background of your financial professional on FINRA's BrokerCheck
Avantax affiliated Financial Professionals may only conduct business with residents of the states for which they are properly registered. Please note that not all of the investments and services mentioned are available in every state. Securities offered through Avantax Investment Services℠, Member FINRA, SIPC, Investment Advisory services offered through Avantax Advisory ServicesSM, Insurance services offered through an Avantax affiliated insurance agency. 3200 Olympus Blvd., Suite 100, Dallas, TX 75019. 972-870-6000.
The Avantax family of companies exclusively provide financial products and services through its financial representatives. Although Avantax Wealth Management® does not provide or supervise tax or accounting services, Avantax representatives may offer these services through their independent outside business. Content, links, and some material within this website may have been created by a third party for use by an Avantax affiliated representative. This content is for educational and informational purposes only and does not represent the views and opinions of Avantax Wealth Management® or its subsidiaries. Avantax Wealth Management® is not responsible for and does not control, adopt, or endorse any content contained on any third party website.
This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
The information being provided is strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. We make no representation as to the completeness or accuracy of information provided at these web sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences.
For Important Information and Form CRS please visit https://www.avantax.com/disclosures.