USA Trends and Developments Contributed by: Rebecca O’Toole, Julie Sirlin Pleshivoy and William Keenen, Greenberg Traurig, LLP
Greenberg Traurig, LLP 333 SE 2nd Ave #4400 Miami FL 33131 USA Tel: +1 305 579 0500 Email: ZeydelD@gtlaw.com Web: www.gtlaw.com/en
The New Geography of Wealth: State Taxation, Wealth Mobility and Modern Estate Planning Introduction Over the past several years, a growing number of states have adopted or proposed new taxes aimed at high income and ultra high net worth individuals. At the same time, the taxpayers most affected by these measures have become increasingly mobile. The result is a dynamic and evolving relationship between state tax policy and taxpayer behaviour. As states pursue new sources of revenue from con - centrated wealth and affluent taxpayers exercise greater geographic flexibility, taxation affects not only what taxpayers pay but also where they live, where trusts are administered and where capital is invested. The practical consequences of state tax policy now extend far beyond annual income tax liability, influ - encing long-term planning decisions for individuals, families and their advisers. The rise of state-level tax pressure on the wealthy In recent years, states have expanded efforts to cap - ture revenue from high income taxpayers and concen - trated wealth. Although these initiatives vary consider - ably in form, they generally share a common objective: raising additional revenue from affluent individuals and families. Two related trends have emerged. First, jurisdictions that have historically imposed relatively high tax bur - dens on wealthy taxpayers, most notably California and New York, continue to expand and refine those regimes. Second, a growing number of jurisdictions
that were not traditionally viewed as major high tax states have begun adopting measures aimed specifi - cally at high income and high net worth individuals. Together, these developments have increased the economic significance of state tax differences and expanded the number of jurisdictions actively com - peting for revenue from concentrated wealth. Taxes directed at affluent taxpayers Some of the most significant developments have involved direct taxation of high income individuals. While jurisdictions such as California and New York have long relied on relatively aggressive taxation of affluent residents, the trend is no longer limited to those traditional high tax states. A growing number of other jurisdictions have begun adopting targeted surtaxes and similar measures aimed at high income households. • Massachusetts provides a prominent example. Fol - lowing adoption of the Fair Share Amendment, the state now imposes an additional 4% tax on income exceeding USD1 million, increasing the marginal rate on such income from 5% to 9%. • Other states have begun moving in a similar direc - tion. In 2026, Hawaii enacted Senate Bill 3125, introducing a new top marginal rate of approxi - mately 13% on income exceeding USD1 mil - lion. The legislation is notable not only because it increased rates on taxpayers with substantial income, but also because it was paired with broad - er tax relief for lower-income residents, reflecting a deliberate policy choice to shift a greater share of the tax burden to wealthy taxpayers.
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