California’s Version of a Lifetime Wealth Tax #taxupdate #ultrahighnetworth #taxplanning
California’s Proposed Lifetime Wealth Tax — AB-259: Introduced January 2023 and Heard January 2024. A new legislative development that may impact high-net-worth individuals in California. The state legislature is currently considering a bill that, if enacted, would introduce a new wealth tax. The proposal entails an annual tax of 1% on residents with a global net worth exceeding $50 million, or $25 million for those filing separately as a married couple. Furthermore, for individuals whose worldwide net worth surpasses $1 billion, or $500 million for married filing separately, an additional tax of 0.5% would be applicable. This “wealth tax” is proposed to take effect from the 2026 tax year and the tax base would include: a) Stock in any publicly and privately traded C-corporation; b) Stock in any S-corporation; c) Interests in any partnership; d) Interests in any private equity or hedge fund; e) Interests in any other non-corporate businesses; f) Bonds and interest-bearing savings accounts; g) Cash and deposits; h) Farm assets; i) Interest in mutual funds or index funds; j) Put and call options; k) Futures contracts; l) Art and collectibles; m) Financial assets held offshore; n) Pension funds; o) Other assets, excluding real property; p) Debts other than mortgages or other liabilities secured by real property; q) Real property; and, r) Mortgages and other liabilities secured by real property. It's important to note that for this bill to become law, it requires a two-thirds majority vote in both the California State Senate and Assembly. Individuals and families potentially affected by this legislative change should consider proactive tax planning strategies and stay informed on the bill's progress. It should be planned for and considered a possibility in a long-term tax plan. It won’t pass anytime soon, but it’s aligned with California’s tax policy. Read the full analysis below: https://lnkd.in/gFRxkCVM #california #wealthtax #taxplanning #taxlaw #uhnw #financialplanning