Washington state now has a millionaire tax on the books. Massachusetts is already spending the proceeds of one. And California may ask voters to go even further, with a first-of-its-kind levy on billionaire wealth. Across the country, state legislatures are turning to targeted taxes on their highest earners to plug budget holes and bankroll public services, a trend that is accelerating even as legal and practical questions pile up.
The push marks a notable shift in state tax policy. For decades, most states avoided singling out top earners for separate tax treatment, wary of driving wealthy residents to lower-tax jurisdictions. Now, at least three major states are betting that the revenue upside outweighs the risk, and their approaches range from a straightforward income surtax to an untested annual tax on net worth.
Washington signs its millionaire tax into law
Governor Bob Ferguson signed SB 6346, titled “Tax on millionaires,” during the 2025-26 legislative session, making Washington one of the few states without a broad income tax to impose a targeted levy on high earners. The move builds on a political path the state cleared in 2023, when the Washington Supreme Court upheld a 7% tax on capital gains above $250,000, rejecting arguments that it violated the state constitution’s uniformity clause.
The Washington Department of Revenue lists ESSB 6346 among the bills passed and signed this session and has begun publishing implementation guidance, including filing mechanics and timelines. The full legislative record, including bill text, fiscal notes, committee materials, and final vote tallies, is available through the state legislature’s official portal.
What the primary documents do not yet provide is a definitive, state-endorsed projection of annual revenue. Specific dollar figures have appeared in news coverage and advocacy materials, but the Department of Revenue has not published a verified baseline estimate as of spring 2026. Until it does, any revenue number attached to the law should be treated as preliminary.
Massachusetts shows what a millionaire surtax can raise
Massachusetts offers the closest thing to a real-world test case. Voters approved the Fair Share Amendment in November 2022, adding a 4% surtax on annual income above $1 million on top of the state’s flat 5% income tax rate. Revenue is constitutionally earmarked for education and transportation.
The state’s Fair Share impact report shows surtax collections have been certified and appropriated by fiscal year, with spending directed to K-12 education, higher education, and transportation infrastructure. The Massachusetts Department of Revenue reported that fiscal year 2025 revenue collections, which closed on June 30, 2025, totaled $43.708 billion. The year-end statement explicitly separates totals with and without the surtax, allowing analysts to isolate the levy’s contribution to the state’s bottom line.
The revenue numbers are solid, but the harder policy questions remain open. No state agency has published migration data isolating whether wealthy taxpayers are leaving Massachusetts at elevated rates since the surtax took effect. Tax advisors and relocation consultants have reported anecdotal upticks in interest, but those accounts lack the statistical grounding to support broad conclusions. Similarly, there is little public data on whether high earners are restructuring compensation, spreading income across years, or accelerating charitable deductions to stay below the $1 million threshold.
California floats a billionaire wealth tax
California’s proposal is the most ambitious of the three and the furthest from becoming law. Initiative 2025-024 would impose a new annual tax on the net worth of billionaires, a structure fundamentally different from the income-based surtaxes in Washington and Massachusetts.
A nonpartisan fiscal assessment from the Legislative Analyst’s Office identifies possible revenue ranges but warns that receipts could swing dramatically from year to year. The LAO flags several challenges: net worth is harder to value annually than wages or investment gains, assets can be shifted across state lines or into hard-to-appraise holdings, and the state would need to build an entirely new administrative apparatus to assess and audit billionaire-level portfolios.
As of spring 2026, the initiative has not qualified for the ballot, received a governor’s endorsement, or been voted on. Until it clears the signature-gathering process and appears on a certified ballot, it remains a proposal rather than a policy. Even if voters approve it, legal challenges are likely. Courts could be asked to rule on constitutional questions that wealth taxes raise in ways income taxes typically do not.
The national backdrop driving these efforts
These state-level pushes are not happening in isolation. The federal cap on state and local tax (SALT) deductions, first imposed in the 2017 Tax Cuts and Jobs Act and still in effect, has squeezed high earners in high-tax states and complicated the political calculus around new levies. Lawmakers in New York, New Jersey, Connecticut, and Minnesota have all debated or enacted their own millionaire-tax proposals in recent years, creating a patchwork of state-level surcharges that did not exist a decade ago.
The common thread is fiscal pressure. States face rising costs for education, infrastructure, healthcare, and public safety, and many are reluctant to raise broad-based taxes on middle-income households. Targeting millionaires and billionaires polls well and concentrates the burden on a small number of taxpayers, but it also concentrates revenue risk. If a handful of high earners relocate, retire, or simply have a bad year in the markets, collections can drop sharply.
What high earners in these states should track
In Washington, the immediate priority is the Department of Revenue’s guidance page. Taxpayers whose income fluctuates near the threshold will want clarity on how the law treats one-time events such as business sales, stock option exercises, or large bonuses. The agency is still building out its compliance framework, and early filings will set precedents.
In Massachusetts, taxpayers already subject to the Fair Share surtax should confirm that estimated payments and withholding reflect the additional 4% levy, especially if income swings near the $1 million line from year to year. Underpayment penalties can add up quickly when a surtax is layered on top of the existing rate structure. Advisors may also revisit the timing of income recognition and charitable giving strategies as more data emerges on how the surtax interacts with federal deduction limits.
In California, there is no compliance obligation today. But residents with substantial wealth should monitor whether Initiative 2025-024 gathers enough signatures to qualify for the ballot. If it does, the final ballot language will determine how different asset classes, ownership structures, and valuation methods are treated, details that could reshape long-term estate and financial planning for the state’s wealthiest households.
Where the experiments go from here
Washington has moved from debate to implementation. Massachusetts is generating real revenue but still waiting for data on whether the tax is changing taxpayer behavior. California is testing whether voters will embrace a far more aggressive approach to taxing wealth itself, not just income. Each state represents a different stage of the same policy arc, and the results will ripple well beyond their borders. How much these taxes actually collect, whether high earners stay or leave, and whether courts uphold the new levies will shape the national argument over who should shoulder the heaviest tax burdens for years to come.
