The SEIU-backed California billionaire tax is a proposed annual tax on the worldwide net worth of the state’s wealthiest residents. The leading version, Assembly Bill 259, would charge 1% on net worth above $50 million and an additional 0.5% surtax on net worth above $1 billion starting in tax year 2026. It is not law. AB 259 stalled in committee during the 2023–2024 session, but the Service Employees International Union and allied groups are continuing to push wealth-tax measures, with proposals aimed at the 2026 ballot that would direct revenue to healthcare, public education, and food assistance.
Where the Proposal Stands Now
AB 259, formally the Wealth Tax Act, was introduced on January 19, 2023. It was filed with the Chief Clerk in February 2024 under Joint Rule 56, which means it did not pass out of committee and is no longer active.1Franchise Tax Board. California Code AB 259 – Wealth Tax Act
A companion measure, Assembly Constitutional Amendment 3 (ACA 3), was introduced alongside it. Rather than imposing a tax directly, ACA 3 would have amended the California Constitution to grant the Legislature explicit authority to tax “all forms of personal property or wealth, whether tangible or intangible,” with administration assigned to the Franchise Tax Board and the Department of Justice.2California Legislative Information. ACA 3 It also stalled.
SEIU and allied organizations have not dropped the idea. Efforts have continued into 2026 with proposals that earmark wealth-tax revenue for healthcare, K–14 public education, and food support programs. The mechanics below follow the AB 259 framework because it is the most detailed legislative text available and remains the template for ongoing efforts.
Who Would Pay the Tax
The Net Worth Thresholds
Under AB 259’s 2026-and-beyond structure, the 1% tax applies to every California resident, part-year resident, or temporary resident whose worldwide net worth exceeds $50 million. For married taxpayers filing separately, the threshold drops to $25 million. A second layer kicks in at $1 billion in net worth ($500 million for married filing separately), where an additional 0.5% surtax applies on top of the base 1% rate.3California Legislative Information. AB 259 Wealth Tax – False Claims Act The Franchise Tax Board estimated that roughly 16,000 taxpayers would file under these thresholds.1Franchise Tax Board. California Code AB 259 – Wealth Tax Act
For tax years 2024 and 2025, the bill as drafted would have used a different structure: a flat 1.5% tax on net worth exceeding $1 billion ($500 million for married filing separately), with the broader $50 million threshold not taking effect until 2026.1Franchise Tax Board. California Code AB 259 – Wealth Tax Act
Residency, Part-Year Status, and “Temporary Residents”
The bill defines residency by cross-referencing existing California tax law at Revenue and Taxation Code Section 17014, which generally treats anyone domiciled in California or present in the state for other than a temporary or transitory purpose as a resident. Part-year residents owe the tax on a prorated basis tied to the percentage of days they spent in California that year.4LegiScan. Bill Text CA AB259 2023-2024 Regular Session Introduced
A third category, “temporary resident,” captures people who don’t qualify as full or part-year residents but still have “substantial presence” in California. That test mirrors federal substantial-presence rules under IRC Section 7701(b)(3), substituting “this state” for “the United States.”4LegiScan. Bill Text CA AB259 2023-2024 Regular Session Introduced
Leaving California Doesn’t End It Right Away
Moving out of state does not immediately cut off the obligation. The bill uses a four-year apportionment formula for former residents. In the first year after departure, the numerator of the fraction reflects the portion of that year spent in California plus the prior three years of residency. Each following year, the numerator drops by one until it reaches zero. A long-time resident who leaves California could still owe a declining share of the wealth tax for up to four additional years. New residents face the mirror image: their first year starts with a numerator of zero and the fraction grows by one each year until it reaches four-fourths.1Franchise Tax Board. California Code AB 259 – Wealth Tax Act
What Counts Toward the Net Worth Calculation
AB 259 requires taxpayers to report 18 categories of worldwide assets separately. The list covers:
- Publicly and privately traded corporate stock, including C-corporation and S-corporation shares
- Partnership, private equity, hedge fund, and other noncorporate business interests
- Bonds, savings accounts, mutual funds, index funds, put and call options, and futures contracts
- Cash and deposits
- Farm assets
- Art and collectibles
- Pension funds
- Financial assets held offshore
- Other assets excluding real property
Debts, mortgages, and other liabilities are also reported, since they reduce the net worth figure.4LegiScan. Bill Text CA AB259 2023-2024 Regular Session Introduced
One detail catches most people off guard. Directly held real property appears on the reporting forms but is explicitly excluded from the net worth calculation under Section 50306 of the bill, and mortgages or liabilities secured by that real property are excluded along with it. Wealth concentrated in directly owned land and buildings would not increase the wealth-tax bill. The carve-out likely reflects California’s existing property tax system under Proposition 13, which already taxes real estate separately.
Unrealized gains do count. Stock that has appreciated by $200 million but has not been sold is still part of worldwide net worth. That is a fundamental departure from income taxation, which generally reaches gains only when an asset is sold.
What the Bill Would Cost
Take someone with $2.5 billion in net worth, excluding directly held real property. The first $50 million is exempt. The next $950 million (from $50 million up to $1 billion) is taxed at 1%, producing $9.5 million. The remaining $1.5 billion above $1 billion is taxed at 1.5%, producing $22.5 million. The annual wealth-tax bill comes to $32 million.1Franchise Tax Board. California Code AB 259 – Wealth Tax Act
Because the tax is recalculated each year on current asset values, a bad market year reduces the bill and a strong year increases it. The Franchise Tax Board estimated the tax would generate approximately $19 billion in its first full year at the broader 2026 thresholds.1Franchise Tax Board. California Code AB 259 – Wealth Tax Act
Filings would use designated wealth-tax schedules submitted alongside the standard California income tax return, following the same April 15 deadline.5Taxes. Important Dates for Income Tax Each of the 18 asset categories would need to be reported with acquisition costs and current fair market values. Unique or illiquid holdings like private business interests, art, and collectibles would require certified appraisals, which typically run from $1,500 to $50,000 depending on complexity and would become a recurring annual expense.
Why It Hasn’t Become Law
Beyond the political difficulty of passing a wealth tax, two sets of legal problems help explain why AB 259 stalled and why any revived version faces a hard road.
Federal Constitutional Questions
The U.S. Supreme Court’s 2024 decision in Moore v. United States upheld the Mandatory Repatriation Tax but explicitly declined to decide whether the Constitution requires income to be “realized” (actually received or converted to cash) before it can be taxed. The majority noted that the case involved income already realized by the corporation, so the broader question was unnecessary. The Court went further, stating its analysis did not address “taxes on holdings, wealth, or net worth” and noting the government itself acknowledged that a tax on wealth or net worth might be considered a property tax rather than an income tax.6Supreme Court. 22-800 Moore v United States At least four Justices signaled that realization should be constitutionally required before income can be taxed, which would pose a direct obstacle to taxing unrealized appreciation.
The Commerce Clause raises a second hurdle. Under the four-part test from Complete Auto Transit v. Brady, a state tax must apply to activity with a substantial nexus to the taxing state, be fairly apportioned, not discriminate against interstate commerce, and be fairly related to services the state provides.7Constitution Annotated. Modern Dormant Commerce Clause Jurisprudence and State Taxation A tax on a California resident’s worldwide assets, including stock in foreign companies, offshore accounts, and out-of-state business interests, would face challenges on the fair-apportionment prong. The four-year exit provision raises additional due process questions, since it taxes people who may no longer live in or draw benefit from California’s infrastructure.
State Constitutional Authority
California’s own constitution may not currently authorize a tax structured this way, which is part of why ACA 3 was introduced alongside AB 259. ACA 3 would have resolved the question by explicitly granting the Legislature power to tax all forms of personal property or wealth and to classify such property for differential taxation or exemption.2California Legislative Information. ACA 3 Even if state constitutional authority were secured, the federal questions would remain.
What to Watch Next
SEIU-backed wealth-tax efforts have continued past AB 259’s failure, with proposals aimed at the 2026 ballot. The revenue in those versions is earmarked for healthcare, K–14 public education, and food support programs. Any ballot measure would still have to clear the same federal constitutional questions that shadow the legislative version, and a state constitutional amendment of the kind ACA 3 proposed would almost certainly need to pass alongside or before any wealth tax itself could take effect. For now, no California resident owes a wealth tax, and the thresholds, rates, and residency rules described here reflect a proposal rather than a current obligation.