Seven states are actively pursuing state wealth tax proposals: California, New York, Washington, Hawaii, Illinois, Minnesota, and Rhode Island. None has enacted one. Every bill introduced so far has stalled in committee, been reintroduced in a later session, or been redirected to a ballot initiative. The proposals differ in structure and thresholds, but they share a target — the accumulated assets of the ultra-wealthy rather than their annual income — and most trace back to a coordinated coalition of legislators from at least nine states.
How a Wealth Tax Differs From an Income Tax
An income tax reaches money as you earn it. A wealth tax reaches money you already have. The base in most proposals is a resident’s total net worth, or at least the value of their financial assets, minus debts.
Publicly traded stocks and bonds are the easiest piece to value. Private business interests, partnership stakes, and complex financial instruments are much harder, and that difficulty drives most of the debate around enforcement.
Most bills set a high exclusion so only the wealthiest residents would owe anything. Depending on the state, the floor runs from $20 million to $1 billion. Headline rates are modest by income-tax standards, generally 1% to 1.5% of net worth above the threshold. Because the tax applies to the entire stock of qualifying wealth each year, the effective cost compounds: a billionaire owing 1% annually on assets that grow at 7% loses a much larger share of real returns than the headline rate suggests.
A few proposals take a different route. Instead of taxing net worth directly, they treat unrealized gains on assets as taxable income each year — a mark-to-market approach that keeps the tax structurally within an income tax framework.
California
California has been the most aggressive state, though nothing has become law. Assembly Bill 259, introduced in 2023, would have imposed a 1.5% annual tax on worldwide net worth above $1 billion for tax years 2024 and 2025. Starting in 2026, the threshold would have dropped to $50 million at a 1% rate, with an additional 0.5% surtax above $1 billion, bringing the combined top rate back to 1.5%.1California Legislative Information. California Assembly Bill 259 – Wealth Tax: False Claims Act
The bill also reached people who leave the state. Former residents who had been subject to the wealth tax would owe a declining fraction for several years after departure, calculated on a four-year lookback that started at the number of qualifying residency years and decreased by one each year until it hit zero.2Franchise Tax Board. AB 259 Bill Analysis A four-year resident who moved away could still owe a portion of the tax for up to three additional years.
AB 259 died in committee in early 2024 after opposition from the governor, business groups, and constitutional concerns about taxing former residents. Proponents pivoted to a ballot initiative, the 2026 Billionaire Tax Act, which would impose a one-time 5% tax on the net worth of the state’s billionaires. It is currently collecting signatures.
New York
New York uses a different mechanism. Rather than taxing net worth, its flagship proposal forces ultra-wealthy residents to pay income tax on gains they haven’t yet realized. Senate Bill 1570, introduced in 2023, would require residents with net assets of $1 billion or more to treat every asset as if it were sold at fair market value on the last day of the tax year. Any resulting net gains would be included in taxable income and subject to New York’s existing rates.3New York State Senate. NY State Senate Bill 2023-S1570
The hit phases in. In any given year, the taxable amount is capped at one-quarter of the taxpayer’s net assets above $1 billion. If losses exceed gains, they carry forward indefinitely rather than producing a current-year deduction. The definition of “assets” is broad, reaching property owned by a spouse, minor children, trusts where the taxpayer is a beneficiary, and gifts or donations made within the prior five years.
S1570 stayed in the Senate Budget and Revenue Committee through 2024. The concept was reintroduced in the 2025 session as Assembly Bill 3632, with the same mark-to-market structure but updated dates, and was referred to Ways and Means.4New York State Senate. NY State Assembly Bill 2025-A3632 Neither version has advanced to a floor vote.
Washington
Washington has no income tax, and that shapes its approach. House Bill 1473, introduced in 2023, framed the wealth tax as a property tax on financial intangible assets. The logic: real estate and tangible business property are already taxed in Washington, while stocks, bonds, and similar holdings sit under a blanket exemption. HB 1473 would narrow that exemption and impose a 1% annual tax on financial intangible assets valued above $250 million.5Washington State Legislature. Washington House Bill 1473
The bill defined “financial intangible assets” as cash, stocks, bonds, commodities contracts, and ownership interests in partnerships and S-corporations. Non-financial intangibles like trademarks, patents, and copyrights were explicitly exempted. Cryptocurrency was not mentioned in either the bill text or the legislative analysis.6Washington State Legislature. HB 1473 Bill Analysis
HB 1473 was reintroduced but did not advance. In the 2025-26 session, legislators introduced Senate Bill 5797 with a similar concept — a tax on stocks, bonds, and other financial intangible assets — with revenues earmarked for public schools.7Washington State Legislature. SB 5797 – 2025-26
Hawaii
Hawaii’s proposal has moved further than most. Senate Bill 313, which cleared the Senate Judiciary Committee in early 2025, would impose a 1% tax on individual assets above $20 million. Unlike most other state proposals, the Hawaii bill includes real estate, stocks, bonds, cash, art, and collectibles in the tax base rather than limiting coverage to financial intangibles.8Hawaii Senate Majority. Senate Judiciary Committee Passes Wealth Asset Tax Bill for Assets Above $20 Million
The committee amended the bill so the tax would be assessed every three years rather than annually. Taxpayers would report their assets to the Department of Taxation alongside their regular state income tax filings. If enacted, the tax would not take effect until after December 31, 2029, giving the state time to build enforcement infrastructure. Hawaii’s $20 million threshold is the lowest among current proposals, meaning it would reach a wider pool of taxpayers than bills targeting only billionaires.
Illinois, Minnesota, and Rhode Island
Three other states have introduced wealth-related bills more recently.
- Illinois Senate Bill 3376, introduced in early 2026, would apply a mark-to-market regime to annual unrealized gains of residents with net assets over $1 billion. The state constitution requires a flat income tax rate, and opponents argue that taxing only billionaires’ unrealized gains conflicts with that mandate.
- Minnesota House File 4616, introduced in March 2026, would impose a 1% annual tax on taxable wealth exceeding $10 million, covering all real and personal property located within the state minus debts. Its effective date is retroactive to tax years beginning after December 31, 2025.
- Rhode Island’s “Fair Share Tax Package” includes a 1% wealth tax on residents’ worldwide financial assets above $25 million, excluding real estate and retirement accounts.
These bills grew out of a multistate coalition of legislators from at least nine states, including California, Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York, Oregon, and Washington. The coordination is deliberate: if only one state enacts a wealth tax, the wealthiest residents can move. If several act together, the exit routes narrow. So far, none of the coalition states has passed one.
Why None of These Bills Has Become Law
Every proposal faces the same combination of legal and practical problems. The legal side starts with the U.S. Constitution and runs through each state’s own constitution.
Moore v. United States and the Realization Question
In Moore, decided in 2024, the U.S. Supreme Court upheld a one-time federal tax on undistributed earnings of foreign corporations owned by American shareholders, ruling 7-2 that the tax fell within Congress’s constitutional authority. But the majority explicitly refused to decide whether income must be “realized” before it can be taxed. The Court noted that a hypothetical tax on an individual’s holdings or net worth “might be considered a tax on property, not income,” and called those “potential issues for another day.”9Supreme Court of the United States. Moore v. United States (06/20/2024)
At least four justices signaled that realization should be required before income can be taxed. That is a warning for mark-to-market proposals like New York’s and Illinois’s, which tax gains that exist only on paper. A direct wealth tax on holdings faces an even steeper climb, since the Court suggested it could be treated as a property tax rather than an income tax. That matters at the state level, because state constitutional constraints on property taxes tend to be tighter than those on income taxes.
State Uniformity Clauses
Many state constitutions require that taxes apply uniformly to the same class of property. Washington’s constitution limits the aggregate rate of regular property tax levies to $10 per $1,000 of assessed value, effectively 1%.10Washington State Legislature. Understanding Washington’s Property Tax A new wealth tax structured as a property tax on financial assets could push some taxpayers above that ceiling when combined with existing real estate taxes. Washington’s proposals have been framed as narrowing an exemption rather than creating a new tax, but whether courts accept that framing is untested.
Illinois has a different uniformity problem: its constitution mandates a flat income tax rate, so a mark-to-market tax that only applies to billionaires’ unrealized gains would need to survive a challenge that it creates a discriminatory bracket. Hawaii’s inclusion of real estate in its wealth tax base raises its own uniformity questions, since property is already taxed locally.
Interstate Commerce and Jurisdiction
The U.S. Constitution restricts states from burdening interstate commerce with their tax policies. Under the four-part test from Complete Auto Transit v. Brady, a state tax must have a substantial connection to the taxing state, be fairly apportioned, not discriminate against interstate commerce, and be fairly related to services the state provides.11Constitution Annotated. Apportionment Prong of Complete Auto Test for Taxes on Interstate Commerce
Wealth taxes that reach worldwide assets create obvious apportionment problems. If a California resident owns stock in a Delaware company, traded on the New York Stock Exchange, and held in a Texas brokerage account, which state has the right to tax it? When multiple states reach the same intangible property, double or triple taxation is the natural result. Exit tax provisions that follow former residents for years after they leave face an added due process challenge, since the state’s connection to the taxpayer weakens with each passing year.
Valuation and Compliance
Even a wealth tax that survives constitutional challenge is hard to administer. Publicly traded securities can be valued at the closing price on the last day of the year. Everything else is harder.
Closely held businesses are the biggest problem. There is no market price for a private company, so fair market value requires a professional appraisal accounting for earnings, assets, industry conditions, and the illiquidity discount that comes with holding shares that cannot be sold on an exchange. A wealthy individual may own interests in dozens of entities, and disputes between taxpayers and state auditors over private valuations would be constant.
Reporting is also heavy. Taxpayers would need to file detailed annual inventories of every asset and liability held worldwide. State tax agencies would need to develop audit capabilities most of them do not currently have. Exemptions for retirement accounts and primary residences reduce the load somewhat, but they also create planning incentives: when the line between taxable and exempt is a classification boundary, advisors will spend energy restructuring holdings to fall on the exempt side.
What to Watch Next
The pattern across every state so far is the same. A bill gets introduced, generates headlines, sits in committee, and either dies or comes back the next session with a new number. California’s AB 259 failed. Washington’s HB 1473 stalled. New York’s S1570 was reintroduced. Hawaii’s SB 313 has moved furthest but pushed its effective date to 2030.
Two developments are worth tracking. California’s 2026 Billionaire Tax Act is collecting signatures for the ballot, which bypasses the legislative bottleneck that killed AB 259. And the constitutional questions the Supreme Court left open in Moore will eventually need answers, either from a federal case or from a state wealth tax that gets far enough to be challenged. Until one of those things happens, the volume of proposals will likely keep growing while the count of enacted laws stays at zero.