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Moving out after January 1, 2026, would not by itself avoid the residency condition in California Proposition 40. The measure, which is proposed for the November 3, 2026 ballot, would apply to qualifying billionaires who were California residents on that date. Whether someone was a resident then depends on the facts and applicable law—not simply on where they live now.
What Proposition 40 proposes
As of October 4, 2026, Proposition 40 is a proposal, not enacted law. The California Secretary of State’s 2026 voter guide lists it for the November 3 general election. The California Legislative Analyst’s Office (LAO) describes the measure as a one-time tax of 5 percent of net worth for qualifying billionaires who were California residents on January 1, 2026, generally due in 2027. The proposed text calls January 1 the “tax obligation date” and December 31, 2026 the “valuation date.”
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The official summaries say covered assets include businesses, securities, art, collectibles, and intellectual property. Real estate, pensions, and retirement accounts generally would be excluded, but the statutory text contains definitions and exceptions; those broad categories should not be treated as unconditional exclusions. The proposal would allow payment over five years at additional cost.
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The proposed text also says standard apportionment would not be reduced based on residency history, including whether a person was a California resident before the tax-obligation date. It provides a specified process for alternative apportionment in certain circumstances. These are proposed terms, not rules currently in effect.
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How California determines residency
California does not use one universal day-count rule to determine income-tax residency. In its January 27, 2026 analysis, Residency rules for state personal income tax purposes, the LAO states: “The state does not have a single rule for determining whether a taxpayer is a resident or nonresident for tax purposes.” Instead, California reviews a person’s professional, personal, and social connections. That current income-tax framework is relevant context for understanding the proposed date test, but it is not a shortcut to deciding anyone’s status under Proposition 40.
California Franchise Tax Board (FTB) Publication 1100, revised October 2024, covers taxation of nonresidents and people who change residency into or out of California. It directs taxpayers to FTB Publication 1031, Guidelines for Determining Resident Status, for help evaluating residency and whether income is taxable by California. A change of home, driver’s license, voter registration, or mailing address alone does not establish a result under the proposal or resolve all residency questions.
What moving means for the January 1 date
The key question under Proposition 40’s proposed terms is whether the person was a California resident on January 1, 2026. A move made after that date would not, by itself, alter the proposal’s specified residency date. A move before that date also does not automatically establish nonresident status: the person’s circumstances and California’s residency standards would matter. The official materials do not determine how those standards would apply to any particular individual.
Leaving California does not necessarily end California tax exposure. Under current rules, nonresidents can still owe California income tax on California-source income. That income-tax treatment is separate from the proposed net-worth tax and does not itself determine whether someone met Proposition 40’s proposed residency condition.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Do not confuse Proposition 40 with a separate residency proposal
A separate initiative, A.G. File No. 2025-039, proposed changing California personal-income-tax residency definitions. Its proposed approach included a day-count test and criteria involving state-issued identification and voter registration elsewhere, as well as additional tax treatment for some high-income nonresidents spending more than two months in California. The LAO analyzed it on January 27, 2026, and the Secretary of State said it entered signature circulation in February 2026. Those are terms of a distinct proposal; they are not current residency law and are not Proposition 40’s rules.
Quick Recap
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| Question | Proposition 40 | Separate initiative, A.G. File No. 2025-039 |
|---|---|---|
| What it addresses | Proposed one-time net-worth tax | Proposed changes to personal-income-tax residency classification |
| Residency approach described in the materials | Whether the person was a California resident on January 1, 2026 | Proposed day-count and out-of-state identification and voter-registration criteria |
| Status as of October 4, 2026 | Listed for the November 3, 2026 ballot; not enacted law | Separate proposal described as having entered signature circulation in February 2026 |
What to do if your situation may be affected
- Identify the relevant date. For Proposition 40, the proposed residency date is January 1, 2026, not the later date when a person moves or when the proposed tax would generally be due.
- Review the full factual picture. California’s current residency analysis considers professional, personal, and social connections; no single address change or day count resolves every case.
- Separate the tax questions. The proposed net-worth tax and current California income tax on California-source income have different scopes.
- Get advice on your own facts. Anyone with possible exposure should consult a California tax professional familiar with residency and state taxation. FTB Publications 1100 and 1031 provide general guidance, not an individualized determination.
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