Proposition 42 would prohibit new taxes on “retirement holdings, individually-owned assets, and other forms of personal savings” that take effect after Jan. 1, 2026. That includes financial assets, investment accounts, intellectual property, personal belongings and other assets used for retirement or financial planning.
It also would bar retroactive taxes on past earnings unless the state is using revenue from the tax to respond to emergencies such as a fire or a flood.
Proposition 42 could nullify Proposition 40, the proposed billionaire tax, because the two measures conflict with one another. If voters approve both, the one with the most “yes” votes generally would become law, according to the Legislative Analyst’s Office.
Proposition 42 could reduce state tax revenue but it’s unclear by how much, according to the office’s analysis. Currently, the state does tax certain personal property such as vehicles. It doesn’t tax people for owning financial assets like stocks and investment accounts but does tax income from them.