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Moving out of California after January 1, 2026, would not by itself avoid the residency test in Proposition 40 as proposed. The measure looks to whether a person was a California resident on that date, not simply where they live when a later tax bill is due. Whether someone was a resident on January 1 is a fact-specific question under California’s residency rules. Proposition 40 is a proposal on the November 3, 2026 ballot, not enacted law, as of October 4, 2026.
Why the move date matters
The proposed 2026 Billionaire Tax Act sets January 1, 2026, as its “tax obligation date.” The California Legislative Analyst’s Office (LAO) describes the proposed tax as applying to qualifying billionaires who were California residents on that date. So, under the proposal’s stated terms, moving later in 2026 would not change the date being tested.
The proposal separately sets December 31, 2026, as the valuation date. Those dates do different jobs: residency is determined as of January 1, while the proposed measure uses the later date to value net worth. The initiative text says its standard apportionment is not reduced based on a person’s residency history, including whether they lived in California before January 1; it also provides a process for alternative apportionment in specified circumstances. These are provisions of a proposed measure, not rules that are currently in force.
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What Proposition 40 proposes to tax
The LAO’s 2026 analysis describes a one-time tax of 5 percent of net worth for qualifying billionaires who were California residents on January 1, 2026. It says the tax would generally be due in 2027. The Secretary of State’s 2026 voter guide describes covered assets that include businesses, securities, art, collectibles, and intellectual property. Real estate, pensions, and retirement accounts are generally described as excluded, but the statutory text contains definitions and exceptions; the summary should not be read as making every asset in those broad categories exempt.
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The proposed payment could be spread over five years at additional cost, according to the LAO. The voter guide says 90 percent of revenue would go to health care and 10 percent to food assistance or education-related programs, and that the measure would bar replacing existing funding for those purposes with the new revenue.
What the fiscal estimates do—and do not—say
The LAO estimates a temporary state revenue increase of tens of billions of dollars spread across several years, while warning that both timing and amount are very hard to predict. It also estimates a possible ongoing decrease of less than $1 billion per year in state income-tax revenue from billionaires. These are forecasts, not observed collections. The LAO notes that state and federal spending on state health-care programs exceeds $200 billion per year; that figure is context, not an estimate of Proposition 40 revenue.
How California determines residency under current income-tax rules
California does not use one universal day-count test to decide whether someone is a resident or nonresident for state income-tax purposes. The LAO’s January 27, 2026, explanation says the state conducts a detailed review of a taxpayer’s professional, personal, and social connections. A move, a new address, or time spent outside the state may be part of someone’s circumstances, but no single fact named here automatically decides residency.
For practical guidance, the Franchise Tax Board (FTB) directs taxpayers to Publication 1031, Guidelines for Determining Resident Status. FTB Publication 1100, revised October 2024, covers taxation of nonresidents and people who change residency into or out of California, including tax computation. These publications concern existing income-tax rules; they do not replace the proposed measure’s stated January 1, 2026, date test.
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Leaving California does not erase every California tax connection
A person treated as a nonresident may still owe California income tax on California-source income. FTB Publication 1100 discusses the treatment of nonresidents and people changing residency, and the LAO’s residency explanation notes that nonresidents can remain taxable on income sourced to California. A change in residency therefore does not mean that all income connected to California falls outside its tax base.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.A separate residency proposal is not Proposition 40
A different initiative, A.G. File No. 2025-039, proposed changing state personal-income-tax residency definitions. The LAO analyzed it on January 27, 2026, and a Secretary of State notice says it entered signature circulation in February 2026. Its described approach includes a day-count test and out-of-state identification and voter-registration criteria; it also proposes additional tax treatment for some high-income nonresidents who spend more than two months in California. Those are features of a separate proposal, not current law and not Proposition 40’s residency rules.
| Question | Proposition 40 | A.G. File No. 2025-039 |
|---|---|---|
| Main subject | Proposed one-time tax on net worth for qualifying billionaires | Proposed changes to personal-income-tax residency definitions |
| Residency approach described in official materials | Residency as of January 1, 2026, under the cited California statutes | Proposed day-count and out-of-state identification criteria, with additional treatment described for some high-income nonresidents |
| Status as of October 4, 2026 | Listed for the November 3, 2026 general-election ballot | Separate initiative reported as having entered signature circulation in February 2026 |
| Tax issue addressed | Potential wealth-tax liability | Income-tax residency classification and related income-tax treatment |
What someone facing this question should verify
- The relevant date: establish where you were and what your circumstances were on January 1, 2026, rather than relying only on a later move date.
- The whole residency picture: review professional, personal, and social connections using California’s FTB Publication 1031 guidance; a license, voter registration, home, or mailing address alone does not guarantee a result.
- California-source income: consider any continuing California tax obligations even if you are a nonresident.
- The measure’s status and text: the proposal and ballot status may change, and final statutory language and official guidance matter for any actual liability.
The official materials cited here do not establish how courts would resolve challenges to the proposed date or how the FTB would classify any particular person’s facts. Anyone with potential exposure should consult a California tax attorney or CPA experienced in residency and state taxation.
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