State Tax Ballot Measures to Watch in 2026

This year, chances are good that your 2026 ballot will include some kind of state tax measure. Increasingly, these measures are not just about tax rates or revenue limits, but broader tax policy questions. Voters are being asked to weigh in on issues ranging from property tax relief and graduated income taxes to special taxes on the wealthy.

In the past, tax ballot measures largely focused on limiting government through tax or spending caps and procedural hurdles for future tax increases. This year, more measures ask voters to make underlying tax policy decisions.

These measures reach the ballot in different ways. Some are citizen-initiated; others are referred to voters by state legislatures.

Here are some of the more interesting issues to watch in 2026:

CALIFORNIA

Proposition 40 – Billionaire Wealth Tax

• One-time 5% tax on covered wealth as of December 31, 2026
  • Excludes real property that is held directly by the taxpayer and some pension and retirement accounts.
  • Includes businesses (including real property held through a legal entity), securities, art, collectibles, and intellectual property.
  • Treatment of real property held by a disregarded entity is unclear.
• Applies to billionaires who were California residents as of January 1, 2026.
• Could be restricted or invalidated by other competing ballot measures (See propositions 41 and 42 below).

Propositions 41 and 42 – Countermeasures to the Wealth Tax

• Proposition 41 prohibits new taxes that are excluded from the state spending limit.
• Proposition 42 prohibits new taxes on certain assets.
• If either of these measures passes with more votes than Proposition 40, conflicting provisions could prevent Proposition 40 from taking effect.

What Makes This Interesting?

Unlike an income tax, a wealth tax does not depend on the taxpayer earning any income in the year it is imposed, potentially requiring taxpayers to liquidate assets to pay the tax. It also raises significant administrative and legal questions. Consider a billionaire who moved to California on December 31, 2025 (terrible luck!). Proposition 40 could potentially tax wealth accumulated before the taxpayer became a California resident, raising questions about the state’s ability to tax wealth with limited connections to the state.

Other states have considered implementing a wealth tax, and their lawmakers will likely be watching to see if implementing such a tax is feasible.

Proposition 3 – Extend Existing Taxes on High-Income Earners

• Makes the top three income tax rate brackets (10.3% to 12.3%) permanent. Currently they are temporary and set to expire in 2031.

Proposition 43 – Increase Number of Votes Needed to Pass Local Tax Increases

• Currently, a simple majority is required to pass certain citizen-initiated local tax increases. This measure would require a 2/3 vote.

COLORADO

Amendment 87 – Graduated Income Tax Rates

• Amendment 87 establishes a graduated rate for income taxes with rates from 3.7% to 8.4%, essentially changing the structure of Colorado’s state tax system.
• Removes the uniform tax rate requirement from the Taxpayer’s Bill of Rights (TABOR).

Proposition 136 – Cap Income Tax Rates

• Establishes a 4.4% rate cap on individual and corporate income taxes
• If passes with more votes than Amendment 87, could prevent Amendment 87 from taking effect.

What Makes This Interesting?

Colorado has had a flat tax since 1987, with the rate declining from 5% to the current rate of 4.4%. Amendment 87 would fundamentally change this structure.

FLORIDA

Amendment 3 - Expanded Homestead Exemption

• Increases the homestead exemption for non-school property taxes from approximately $50,000 to $150,000 in 2027, to $250,000 in 2028, and indexed to inflation thereafter.
• Local governments can further raise the exemption to the full value of the property for all non-school taxes.
• Decreases the allowed annual assessment increase for non-homestead properties from 10% to 5%.

What Makes This Interesting?

This amendment illustrates a nationwide push for property tax relief. But if homestead property raises less revenue, will businesses, rental property, and other non-homestead property bear the additional tax burden when budgets come up short? Or will the burden shift to other taxpayers through additional taxes such as sales taxes or special levies?

IOWA

Amendment 1 – Supermajority Required to Pass Income Tax Increases

• Requires a two-thirds vote in both legislative chambers to increase or create certain income-based taxes, rather than the current simple majority.
• Does not apply to taxes imposed at the option of a local government.

NORTH CAROLINA

Constitutional Amendment - Income Tax Cap Reduction

• Reduces the maximum income tax rate from 7% to 3.5% under the North Carolina Constitution, although individual and corporate rates are already at or scheduled to fall below the proposed cap.

UTAH

Constitutional Amendment B – Supermajority Required to Increase or Expand Taxes

• Requires a 60% vote on citizen-initiated ballot measures that impose a new tax, expand an existing tax, or increase certain tax rates.

WASHINGTON

Initiative 645 – Repeal Millionaire’s Tax and Prohibit State and Local Taxes on Individual Income

• Repeals the recently enacted 9.9% tax on individual income over $1 million.
• Prohibits future individual income taxes.

What Makes This Interesting?

Most people think Washington already prohibits income taxes, but the prohibition comes from a judicial interpretation of the state constitution. This Initiative would add another layer of assurance in the form of an explicit statute.

The Big Picture

Taken together, these measures ask voters to make very different choices about the future of state taxation. And in California and Colorado, competing measures mean the outcome may depend not only on which measures pass, but on which receive the most votes. The results will affect taxpayers well beyond 2026.