USA Trends and Developments Contributed by: Rebecca O’Toole, Julie Sirlin Pleshivoy and William Keenen, Greenberg Traurig, LLP
• More recently, Maine joined the trend by enacting a 2% surcharge on income above USD1 million as part of a broader budget measure. • Washington likewise demonstrates the growing willingness of states to target high earning taxpay - ers directly. Historically regarded as a no income tax state, Washington enacted a capital gains tax in 2021 and, more recently, enacted Senate Bill 6346 in 2026, creating a 9.9% tax on income above USD1 million beginning in 2028, although the statute is expected to face constitutional chal - lenges. Viewed together, these developments reflect the extent to which jurisdictions traditionally regarded as tax favourable are more frequently exploring taxes directed at high income individuals and concentrated wealth. Taxes directed at wealth itself A related trend involves taxes directed not merely at income, but at wealth itself. Historically high tax juris - dictions continue to explore new methods of taxing accumulated wealth, while other states increasingly target ownership of high-value assets. • California provides perhaps the clearest example. The state already imposes some of the highest tax burdens in the country, including taxation of capital gains as ordinary income and non-conformity with the federal Section 1202 qualified small business stock exclusion. Against that backdrop, California’s proposed 2026 Billionaire Tax Act would impose a one-time 5% excise tax on the net worth of cer - tain California resident individuals and trusts with net worth of at least USD1 billion. Although the proposal has not been enacted, it reflects a willing - ness to move beyond taxing income and towards direct taxation of accumulated wealth. • New York has pursued a different approach. In 2026, it enacted a pied-à-terre tax imposing an annual surcharge on certain non-primary residenc - es owned by affluent individuals. Unlike New York’s existing income taxes, the tax is directed at owner - ship of high-worth property itself. In doing so, New York has expanded taxation beyond income and transfer events to include certain forms of luxury property ownership, effectively increasing the tax
burden associated with wealth located within the state, even where the owner resides elsewhere. • Rhode Island has advanced proposals directed at both high-value real estate and second homes, reflecting a greater willingness to tax luxury proper - ty ownership independently of a taxpayer’s annual income. • At the local level, Los Angeles’s Measure ULA, commonly referred to as the “mansion tax”, imposes elevated transfer taxes on high-value real estate transactions and seeks to capture additional revenue from transactions involving concentrated wealth. Some jurisdictions have considered vacan - cy taxes, empty-home taxes, and similar meas - ures targeting underutilised high-value real estate. Although these proposals have met with mixed success, including a failed proposal in San Diego, they reflect a broader effort to tax wealth based on ownership and use of valuable assets rather than annual income. • Connecticut has also considered a mansion tax targeting high-value real estate transactions. Although these measures differ in form, they reflect a common theme: states are broadening their tax base beyond traditional income taxation and exploring ways to tax accumulated wealth, high-value assets and ownership interests directly. A common direction Taken together, these developments reveal more than isolated state tax increases. Historically high tax juris - dictions continue to expand and refine taxes targeting affluent taxpayers and concentrated wealth, while a growing number of other states are adopting similar measures for the first time. Consequently, both the intensity of high wealth taxation in traditional high tax states and the number of states pursuing similar poli - cies continue to grow. The result is a widening divergence among state tax regimes and a greater economic significance of where wealthy individuals live, hold assets, administer trusts and realise income. As those differences continue to expand, taxpayers and their advisers are more fre - quently evaluating whether remaining in a particular jurisdiction justifies the associated tax cost.
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