California voters have approved Proposition 42, a measure that bars new taxes on a broad range of personal assets. The Associated Press called the measure’s passage while votes were still being counted. With about 96% of ballots tallied, just over 51% of voters supported it and nearly 49% opposed it.
Proposition 42 prohibits new taxes on assets including retirement accounts such as 401(k)s, business interests, digital assets, intellectual property and personal belongings. It does not apply to real estate. The measure also bars retroactive taxes on personal property, except during a state-declared emergency.
The proposition held a narrow lead after vote counting began on Nov. 3. Its approval means the state is barred from imposing the types of taxes covered by the measure unless voters later change the restriction.
Supporters said the measure would protect retirement savings and other personal assets from future taxation. “Public safety officers spend their careers keeping California communities safe, and they plan for retirement knowing exactly what they’ve earned. On election day, voters made sure those savings can’t become the next target for new taxes,” said Brian Marvel, president of the Peace Officers Research Association of California. He said the measure offered public safety officers and other Californians confidence that their retirement savings would remain available to them.
Proposition 42 was placed on the ballot as a countermeasure to Proposition 40, which proposed a one-time tax on billionaires’ assets. The two measures were linked: had Proposition 40 passed, Proposition 42 would have nullified the wealth tax if it received more votes. Voters rejected Proposition 40 but approved Proposition 42, closing off a potential source of revenue for the state.
California generally taxes income but not the unrealized gains in assets—an increase in value that has not been realized through a sale. Susan Shelley, vice president of communications at the Howard Jarvis Association, said the result showed concern among voters that retirement savings could be targeted for taxation in the future. The association opposed the tax proposed by Proposition 40.
Proposition 42 was backed by Building a Better California, a group funded by Google co-founder Sergey Brin, venture capitalists and other technology executives. The group also opposed Proposition 40. Other supporters included the California Small Business Association, the California Senior Alliance and the California Professional Firefighters organization.
In arguments supporting Proposition 42, backers said Californians already face high taxes and living costs and need protection against taxes on personal property and retirement savings.
Supporters of Proposition 40 have said they may return with a wealth-tax proposal for the 2028 ballot. Any future effort to tax personal assets covered by Proposition 42 would require voters to overturn or modify the measure’s restrictions.