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CA
Prop 42
Personal Property Taxes

Constitutional Amendment

Prohibits New State Personal Property Taxes and Certain Retroactive State Taxes

Prohibits new state and local taxes on personal property and any tax that applies retroactively.

SPUR's Recommendation

Prop. 42 was primarily placed on the ballot to defeat Prop. 40, a competing tax measure on billionaires. If passed, it would constrain local and state governments’ current and future ability to raise revenues for much-needed housing, transportation, infrastructure, and social services, which are already facing cuts at the federal and state levels.

Vote NO

What Prop. 42 Would Do

Proposition 42 would block state and local governments from implementing any new taxes on personal property, including retirement holdings, personal savings, real estate, stocks, and other assets. It would prohibit retroactive taxes based on a person’s prior residency status.

The measure is designed to nullify Prop. 40, which imposes a one-time excise tax of 5% on billionaires based on retroactive residency.

The Backstory

Federal bill H.R. 1, known as the “Big Beautiful Bill,” was enacted in July 2025 and will make heavy cuts to critical social safety net programs across the state, including about $19 billion in annual cuts to Medi-Cal, which covers half of children aged 0 to 5 and nearly 15 million low-income Californians.1 Funding cuts are projected to accelerate hospital closures across California, particularly in rural areas. They are also expected to heavily impact food assistance programs such as CalFresh and the Supplemental Nutrition Assistance Program (SNAP), which serves an estimated 5 million Californians.

The proposed Prop. 40 billionaire tax aims to help offset federal funding cuts. It would create a new tax on wealth, including financial assets such as stocks and intellectual property that California does not currently tax, and would apply retroactively to billionaires residing in California on or after January 1, 2026. California currently taxes income and property such as real estate, but not financial assets or other forms of wealth.

Prop. 42 was placed on the ballot through a signature-gathering effort led by Building a Better California, which is funded by Google co-founder Sergey Brin and other billionaires, to counter Prop. 40. It requires a simple majority to pass (50% plus one vote). If both Prop. 42 and Prop. 40 pass, the measure receiving more votes would prevail. (Building a Better California has also placed Prop. 41, a separate countermeasure to Prop. 40, on the ballot.)

Equity Impacts

California’s current tax system disproportionately benefits high-income households, while lower-income households bear a greater burden from high housing costs and regressive taxes such as property and sales taxes.2 California’s practice of not taxing inherited wealth and financial assets contributes to income inequality and persistent racial disparities. U.S. Census data show that low-income families in California are much more likely to be Latino or Black, while most high-income families are white or Asian.

This proposition, which restricts new taxes on personal property, including retirement holdings, personal savings, real estate, stocks, and other assets, would block efforts to create new progressive tax policies to fund important priorities, including health care, food assistance, and other programs that disproportionately benefit lower-income Californians and communities of color. 

Pro

  • Banning retroactive taxes would create more predictability for taxpayers.

Cons

  • Prop. 42 was placed on the ballot to block a competing measure. It could affect the state’s ability to raise revenue from other tax measures in the future.
  • Applying taxation limits would constrain governments’ ability to fund urgent priorities, especially amid unprecedented federal and state budget cuts.
Vote NO on Prop 42 - Personal Property Taxes
Footnotes

1 Children Now, Medi-Cal: The Foundation of California Kids’ Health & a Bedrock of Our State Economy, January 2025.

2 Kayla Kitson, Promoting Racial Equity Through California’s Tax and Revenue Policies, California Budget and Policy Center, April 2021, 5; Kayla Kitson, Tax Breaks: California’s $60 Billion Loss, California Budget and Policy Center, January 2020, 6–8, 10–11.