New York Wealth Tax: Billionaire Mark-to-Market and Estate Tax

New York does not have a wealth tax, and neither does any other U.S. state. What exists in New York is a pending proposal that would tax billionaires on the annual growth of their assets even when nothing is sold, plus an already-aggressive estate tax that quietly functions as a tax on accumulated wealth when a resident dies. Senate Bill S165 and its Assembly companion A3632 remain in committee as of mid-2026.¹

The Billionaire Mark-to-Market Proposal

Senate Bill S165, sponsored by Senator Jessica Ramos, would add a new Section 612-a to the New York Tax Law titled “Billionaire Mark-to-Market Taxation.” If you’re a New York resident with a net worth of $1 billion or more, the state would treat your assets as if you sold everything at fair market value on December 31 of each year. Paper gains above a phase-in cap would be added to your taxable income and taxed at the same rates as ordinary income, topping out at 10.90%.²

That is a real departure from how taxation currently works. Under both federal and existing New York law, you owe capital gains tax only when you actually sell an asset. A stock that doubles over a decade generates no tax bill until you dispose of it.³ The mark-to-market bill would eliminate that deferral for billionaires through an annual “deemed sale.”

The bill has been introduced in various forms since the 2019-2020 session and has never advanced out of committee. The current version sits in the Senate Budget and Revenue Committee.¹ No state has enacted a broad wealth tax or a mark-to-market tax on unrealized gains, so if New York moved forward it would be operating without a proven model.

Who Would Be Covered

The $1 billion net worth threshold is the entry point. Below it, the tax doesn’t apply regardless of your income. Above it, the definition of “assets” is deliberately wide: all real and personal property, tangible and intangible, wherever located in the world, plus assets held by your spouse, minor children, and any trust or estate where you are a beneficiary.⁴

The bill also reaches backward. Assets you donated to a private foundation, donor-advised fund, or political organization within the past five years are counted as if you still owned them, closing the obvious workaround of parking wealth in charitable vehicles to duck the threshold. Debt does reduce the calculation: “net assets” means fair market value minus liabilities.¹

Residency

The tax reaches only New York residents, but New York defines residency more broadly than most people expect. You’re a resident if New York is your domicile (your permanent home), or if you maintain a permanent place of abode in New York for substantially all of the tax year and spend 184 days or more in the state. Any part of a day counts as a full day.⁵ Once you’re a resident, your worldwide assets count toward the billion-dollar threshold, not just property physically located in New York.⁶

How the Deemed Sale Would Work

The proposal runs in two phases. In the first year, every billionaire resident would recognize gain or loss as if they sold all assets at fair market value on December 31, 2024. This catch-up reaches all previously unrealized appreciation, not just the current year’s growth. Because the initial bill could be enormous, the taxpayer gets a choice: pay in full with the 2025 return, or spread the amount over ten annual installments with a deferral charge on future payments.¹

After that, the deemed-sale calculation repeats every December 31, adjusted for gains already taxed in earlier years so the same appreciation doesn’t get hit twice.

The Phase-In Cap

The bill doesn’t tax all unrealized gains at once. A phase-in cap limits the taxable amount in any year to one-quarter of the taxpayer’s net assets in excess of $1 billion. A taxpayer with $3 billion in net assets has $2 billion above the threshold, so the annual cap is $500 million. Only gains up to that cap flow into taxable income that year.⁴

What Happens in a Losing Year

If assets decline, the bill does not generate a refund or an immediate deduction. Net losses carry forward indefinitely and offset gains in future years.¹ The state collects in good years but doesn’t write checks in bad ones.

What Rate Would Apply

The deemed gains would be taxed at ordinary income rates, not at a separate wealth-tax rate. For tax years beginning in 2026, New York has nine brackets running from 3.90% to 10.90%, with the top rate hitting at $25 million of taxable income for all filing statuses. Surcharge brackets kick in at $5 million (10.30%) and roughly $1 million to $2.15 million depending on filing status (9.65%).² A billionaire with $500 million in deemed gains would pay the top 10.90% rate on nearly all of it. Add New York City’s income tax (up to 3.876% for city residents) and federal tax, and the effective rate on unrealized paper gains could exceed 50%.

Whether It Would Survive a Court Challenge

The constitutional question is unsettled because no state has ever enacted a tax like this. In Moore v. United States (2024), the U.S. Supreme Court sidestepped the core issue. The Court upheld a narrow federal tax that attributed a foreign corporation’s realized income to American shareholders, but explicitly stated it did not “resolve the parties’ disagreement over whether realization is a constitutional requirement for an income tax.”⁷ The holding covered pass-through entities where the corporation itself had realized income. A New York tax on assets nobody has sold is a different question entirely.

State challenges could also invoke the Dormant Commerce Clause, which restricts how states tax interstate commerce.⁸ When a billionaire holds assets scattered across multiple states and countries, deciding how much of that appreciation New York can legitimately reach raises real jurisdictional problems. The bill itself hedges, limiting its scope to what is “allowable under the New York Constitution, the United States Constitution, and any other governing federal law.”¹

The Wealth Tax New York Already Has: The Estate Tax

While the mark-to-market bill stays in committee, New York already taxes accumulated wealth when a resident dies. The estate tax is governed by New York Tax Law Sections 951 through 961.⁹

For deaths in 2026, the basic exclusion is $7,350,000.¹⁰ Estates at or below that amount owe nothing. The trap is the cliff: if the estate exceeds 105% of the exclusion ($7,717,500 in 2026), the entire exemption vanishes. The state then taxes the full estate from the first dollar, with graduated rates from 3.06% up to 16%.¹¹ An estate worth $7.3 million owes nothing. An estate worth $7.8 million can owe hundreds of thousands. Families miss this constantly because the federal system doesn’t work that way.

How the Federal Exemption Compares

The federal estate tax exemption for 2026 is $15,000,000 per person, or $30,000,000 for married couples, and the federal tax applies only to amounts above the exemption rather than the whole estate.¹² A $10 million New York estate clears the federal threshold easily but blows through New York’s cliff, meaning the full $10 million becomes taxable at the state level. That gap is where most of the state’s estate tax revenue comes from.

Leaving New York to Avoid the Tax

The standard objection to state-level wealth taxes is that wealthy residents will leave, and New York already loses high-income residents to no-income-tax states. The mark-to-market proposal doesn’t include an explicit exit tax, and no state has successfully imposed a tax triggered specifically by changing residency (such taxes run into the Privileges and Immunities Clause, the Commerce Clause, and state uniformity requirements). But a billionaire who moves mid-year would still owe tax on gains accrued while they were a New York resident, and the five-year lookback on charitable donations makes quick pre-departure restructuring harder.

1
New York State Senate. NY State Senate Bill 2025-S165
2
New York State Senate. New York Tax Law Section 601
3
Office of the Law Revision Counsel. 26 U.S. Code 1001 – Determination of Amount of and Recognition of Gain or Loss
4
New York State Senate. NY State Assembly Bill 2025-A3632
5
New York State Department of Taxation and Finance. Income Tax Definitions
6
New York State Department of Taxation and Finance. Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for New York State Personal Income Tax
7
Supreme Court of the United States. Moore v. United States (06/20/2024)
8
Cornell Law School. State Taxation and the Dormant Commerce Clause
9
New York State Senate. New York Tax Law Article 26 Part 1 – Computation of Tax
10
Department of Taxation and Finance. Estate Tax
11
New York State Senate. New York Tax Law 952 – Tax Imposed
12
Internal Revenue Service. What’s New – Estate and Gift Tax