8 States That Have Considered New Wealth Taxes — Could Yours Be Next?

Yahoo

08-04-2025

There's been a lot of talk lately about taxing the wealthiest Americans more to bring more equity to the tax system in the U.S. and to raise additional revenue. The current administration hasn't announced any plans to do so, though some states are taking matters into their own hands.
Massachusetts started the trend, passing a so-called 'millionaire's tax' in 2022. Beginning in 2023, Bay State taxpayers had to pay an additional 4% tax on any income over $1 million, according to the Massachusetts Department of Revenue. The income threshold goes up each year, and only the income above the threshold is subject to the additional tax.
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Several states have floated the idea of a wealth tax, with varying degrees of success. Here are eight states that have considered wealth taxes.
Also see three ways taxing the rich would help the middle class — and two ways it wouldn't.
Illinois voters approved a non-binding referendum in November 2024 that would enable a millionaire tax in that state. The ballot question asked whether voters approved of a change to the state income tax structure that would allow a progressive tax as opposed to the current flat tax.
The millionaire tax itself would raise the income tax by an additional 3% for those taxpayers earning more than $1 million.
Though the referendum was passed, it remains uncertain whether this will be enacted, per the Chicago Sun Times.
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Maryland Gov. Wes Moore proposed a tax increase on his state's wealthiest residents so that he can lower taxes for low- and middle-income taxpayers.
The plan proposed by the governor would increase the highest tax bracket to 6.5% (from 5.75%) for those earning over $1 million ($1.2 million for married couples). Taxpayers earning $500,000 (or $600,000 for a couple) would see less of an increase. Those earning over $350,000 would pay an additional 1% on capital gains.
Maryland's state budget, which included these tax changes, was recently passed, as reported by WBAL.
The Hawaii Senate proposed a bill that would levy a 1% tax on any taxpayer with over $20 million in assets. The bill has passed the Senate Judiciary Committee but has not yet been made law.
If passed, the law would become effective on Jan. 1, 2030.
Democratic lawmakers in Washington have floated the idea of a wealth tax to help balance the state budget, according to the Washington State Standard. There are two different versions of the plan, one being proposed in the House and the other in the Senate.
The House bill proposes a tax on stocks, bonds, mutual funds and some other financial assets. A tax of $8 would be levied for every $1,000 of these kinds of assets above the first $50 million. Pensions, retirement accounts and education savings accounts would not be taxed.
The Senate plan would levy a tax of $10 per $1,000 of assets on those with over $50 million, but this plan would tax all assets, not just the amount over $50 million.
Washington Gov. Bob Ferguson has indicated he will veto a wealth tax that's used to balance the budget.
The wealth tax bill in California has stalled in legislative committee and is unlikely to pass, at least in its current form. The bill, introduced in 2023, proposed an annual tax of 1.5% of a taxpayer's worldwide wealth that exceeded $1 billion.
There is no new wealth tax bill currently in the California legislative pipeline.
Wealthy New Yorkers already pay a higher state tax rate than those with more moderate wealth. Those earning between $5 million and $25 million pay an additional tax of 10.3%, while those earning over 425 million pay an extra 10.9%.
These tax surcharges are effective until 2027, though they could be extended.
Connecticut proposed two wealth tax bills in 2023, which included several provisions aimed at increasing the amount of tax paid by wealthy residents.
These included an increase in the marginal personal income tax to a maximum of 7.49%, an increase in capital gains taxes, a 10% tax on business gross revenues from digital advertising services that exceed $10 billion, a property tax on commercial and residential real estate assessed at over $1.5 million, and an increase to the marginal tax rate for individuals with taxable income over $1 million.
In 2024, Minnesota raised the top income tax rate to 10.85% on net investment income over $1 million.
Minnesota Gov. Tim Walz had proposed an increase in the state's capital gains rate from 11.35% to 13.85%, but that proposal was not passed by the state legislature.
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This article originally appeared on GOBankingRates.com: 8 States That Have Considered New Wealth Taxes — Could Yours Be Next?