Turn your voice into action
State ‘Wealth Tax’ Proposals Take Aim at Family-owned Businesses, Successful Families
New Year Brings New ‘Red Flag’ Issues as States Seek New Revenues
There were a lot of wins in 2025 for family-owned businesses and successful families.
The passage of H.R. 1 held down the rate on higher personal taxes, it improved the Estate Tax rate, and it made permanent the 199A provision, which helps level the playing field for most family-owned businesses versus lower-taxed corporations.
These wins, and many others, family business owners can be grateful for, but sometimes we take our wins for granted, rest too fast, and are surprised when new issues seemingly come out of nowhere.
Looking ahead to 2026, there are still plenty of red flags family-owned businesses and successful families need to be aware of, and to start thinking about.
The greatest of these red flags are the many discussions, proposals, and ballot measures now focused on a “Wealth Tax,” which could be the most harmful tax of all.
It’s both a state-by-state issue and a federal issue.
This year, a Senate proposal, S.2845, entitled the “Billionaires Income Tax Act,” was introduced by Sen. Ron Wyden (D-OR) and a House companion bill, H.R. 5427, was brought to the floor by Congressmen Steve Cohen (D-TN) and Don Beyer (D-VA).
The two “mark-to-market” proposals are aimed at taxing annually unrealized gains on tradable assets, like stocks, while assets like real estate would be paid upon the sale of the asset. The bills also propose to subject increases in a family business’s asset value to the Wealth Tax.
When introduced, the Senate bill had over 21 co-sponsors. The House bill had 27 co-sponsors.
As for states, no state currently collects a true Wealth Tax on all residents, but several have active proposals, surtaxes, or plans targeting successful families and their businesses.
States like Hawaii, Washington, and California have active or recent proposals, or are having serious discussions, on taxing an individual’s or a family-owned business’s assets or net worth.
Some states, like Minnesota, Maryland, and Connecticut, have opted for targeted changes to income or capital-gains taxes, or “wealth-proceeds” taxes, rather than direct taxes on successful family businesses or families. Massachusetts enacted a 4% surtax in 2022 on annual income over $1 million.
But because of legal, constitutional, and administrative challenges, many of these proposals have yet to see the light of day. They’re contested, delayed, or are just symbolic political gestures.
Yet is the operative word.
If you live in these states, it’s worth tracking the legislation, proposals, or ballot measures focused on your success.
What to Watch
If you have a family-owned business or are a successful family, and a large portion of your income comes from investments or is tied up in real estate or expensive equipment, these new tax proposals are aimed at you.
For now, these measures focus on estate taxes, property taxes, income, and capital-gains, but not on all assets. But, as we know, things can change from election to election.
The good news is a Wealth Tax is hard to administer. Most plans face difficult legal, technical, and political hurdles, including valuation difficulties, enforcement costs, constitutional, and property tax constraints.
What’s easier to legislate is a new, or increased, income tax rate at the high-end of tax brackets.
Most state Wealth Tax proposals tend to use alternative approaches, such as taxing business assets, a family’s net worth, or financial assets above a threshold. They can also tax unrealized capital gains or investment income, or capital-gains.
Because of these hurdles, states often opt for easier wealth proceed taxes, capital gains surcharges, or increased income tax rates, all of which are less sweeping than a full Wealth Tax, but much simpler to pass and manage.
Because of this, no state currently collects a “true” Wealth Tax on all residents. But this doesn’t stop proposals or tax plans targeting family-owned businesses and successful families from brewing among lawmakers.
Key State Overview
If you’re not aware of these proposals, here’s a quick state-by-state overview of recent proposals or laws in the United States (as of 2025-2026) that either amount to a Wealth Tax or other tax-hikes targeting family-owned business and successful families.
It’s something to put on your radar for the New Year.
California
Proposed: The 2026 “Billionaire Tax Act” (ballot initiative) would impose a one-time 5% excise tax on net worth for individuals/trusts with US$ 1 billion. As of now (Dec 2025), still in the signature-gathering/qualification phase; not yet enacted.
Hawaii
Proposed: A wealth-asset tax of 1% tax on net worth for taxpayers with over US$ 20 million in assets. The bill has passed a Senate committee but is not law. Under active consideration: lawmakers have floated proposals for a “wealth tax” on financial assets/net worth.
Washington
The state’s Department of Revenue published a “Wealth Tax Study Report” in 2024 studying how such a tax might work. Because of constitutional/property-tax limitations, implementing a true net-worth tax would face legal/administrative challenges. As of now: no wealth tax law enacted.
Illinois
Proposal history: In 2023-2024, bills were introduced to tax wealth/financial assets, e.g., proposals for mark-to-market taxes on unrealized gains or annual asset-based levies. Also: a non-binding referendum approved in November 2024 to allow a “millionaire tax” (i.e., making the income tax structure more progressive rather than flat). As of late 2025: no comprehensive, enacted net-worth wealth tax.
Connecticut
Proposed: In 2023, lawmakers introduced bills aimed at increasing taxes on wealthy residents, e.g., raising marginal income tax rates, increasing capital-gains tax, property-value surcharges, and other tax reforms for high-income/wealthy households. As of 2025: none of these have resulted in a statewide recurring wealth tax.
Massachusetts
A surtax was approved by Massachusetts voters on November 8, 2022, as a constitutional amendment (known as the “millionaire’s tax”). It took effect for tax years beginning January 1, 2023, with the revenue for funding public education and transportation/infrastructure. The tax is not on net worth or assets, but a surtax on taxable income. Under the law, once a taxpayer’s taxable income exceeds a threshold (originally $1,000,000), the portion of income above that threshold is subject to an additional 4% surtax. As of 2025, income above $1,083,150 is subject to the 4% surcharge.
Maryland
Recent changes: Under a 2025 budget plan, the top income-tax bracket rate was increased for high earners. Also, proposals for capital-gains surcharges for high-income households. As of 2025: no statewide net-worth or wealth tax enacted.
Minnesota
Enacted tax-on-wealth-derived income (“Wealth Proceeds Tax”): In 2023, the state adopted a 1% tax targeting investment income / capital-gains / returns from wealth — not a tax on total net worth. This is sometimes called a “quasi-wealth tax,” but not a true recurring net-worth tax.
New York
Discussion/Proposals: Legislators have proposed various ways to increase taxes on very wealthy residents, e.g., “mark-to-market” taxes on financial assets, higher capital-gains, or income surcharges, closing gaps between capital-gains and ordinary income tax. As of 2025: no statewide wealth (net-worth) tax in force.
Other States
Several states have been mentioned in proposals or discussions, such as Vermont, Pennsylvania, Nevada, etc. However, as of 2025, none appear to have passed lasting, comprehensive “wealth taxes (net-worth taxes).”
We hope you’ve enjoyed this article. While you’re here, we have a small favor to ask…
As we prepare for what promises to be a pivotal year for America, we’re asking you to consider becoming a supporter.
The need for fact-based reporting of issues important to family offices and successful families and protecting a lifetime of savings has never been greater. Now more than ever, family offices and successful families are under fire. That’s why Policy and Taxation Group is passionately working to increase the awareness of issues important to family offices and successful families, while continuing to strengthen our presence on Capitol Hill.
Policy and Taxation Group is the Voice for Family Offices and Successful Individuals in Washington, DC focused exclusively on the critical tax and economic policies that impact them.
Since 1995, Policy and Taxation Group has been the leading advocacy group working to reduce and eliminate estate tax, gift tax, and generation skipping transfer tax while blocking increased income tax and capital gains taxes, the creation of a wealth tax, and other hostile tax policies that punish hardworking taxpayers and success.
#incometax #CapitalGainsTax #R&DExpensing #DontPunishSuccess #GrantorTrusts #StepUpinBasis #likeKindExchanges #AcceleratedDepreciation #EstateTax #Deathtax #wealthtax #taxLegislation #incometaxrates #repealestatetax #FamilyOffice #SuccessfulFamilies @PolicyAndTaxationGroup @DitchTheEstateTax #PolicyAndTaxationGroup #DitchTheEstateTax