San Francisco and California Ballot Backstory · Why is this on my ballot?
Prop 42: summary
Prohibits New State Personal Property Taxes and Certain Retroactive State Taxes
Mark your own choices here. You may bring this sheet into the voting booth.
A YES vote means
Bans new state taxes on owning financial assets or other personal property enacted or effective on or after January 1, 2026. Limits retroactive taxes.
A NO vote means
No new limits. The state or voters could still create new taxes on owning financial assets or other personal property, or on past events.
Both ovals are empty on purpose. The choice is yours.
If it fails
Nothing changes if it fails
If Prop 42 fails, current law stays. The Legislative Analyst (LAO) says some personal property is taxed, but simply owning financial assets is not. It says if Prop 42 passes with more yes votes than Prop 40, courts could find a conflict and stop Prop 40.
Why it’s on the ballot now
Personal property is all the things people own other than real estate. The state and local governments already tax owning some of it, like cars and business equipment.
Owning financial assets, like stocks and investment accounts, is not taxed today. The state does tax the income people make from those assets.
A retroactive tax applies to things that happened in the past. One example is a tax on money someone earned two years ago.
The measure's own findings, which argue for it, say "politicians and special interest groups" want to start taxing retirement holdings and other personal savings.
The money
The Legislative Analyst (LAO) says Prop 42 could make it somewhat harder for the state to raise taxes. This could reduce future tax revenue. When and by how much is unclear. See the money chart for the latest filed totals.
Needs a simple majority (50% + 1) to pass Some measures need 55% or two-thirds of votes to pass. This one needs only a simple majority.Who bears the cost
State government (tax revenue)
The LAO says Prop 42 could make it somewhat harder for the state to raise taxes. That could reduce future tax revenues. The LAO says when and by how much is unclear.
Owners of personal property, including financial assetsNo new cost
The LAO says new taxes on owning financial assets or other personal property would not be allowed. The Attorney General says the ban covers new taxes that are enacted or take effect on or after January 1, 2026.
The strongest case for and against
Strongest case for
Supporters include the California Professional Firefighters, the State Building and Construction Trades Council of California and AMVETS, Department of California. They say California is the third most expensive state to retire in. They argue the state Constitution now lets lawmakers tax the value of retirement funds and savings. They say people already paid income tax on that money. Supporters call this double taxation. They say lawmakers and special interests have put forward six plans in recent years to tax retirement and savings accounts. Supporters argue people need stable tax rules. They say the rules should not change after years of saving. They say Prop 42 protects pensions, 401ks, IRAs and personal savings.
Strongest case against
Opponents include US Senator Bernie Sanders and SEIU-United Healthcare Workers West. Opponents say Prop 42 is not really about protecting retirement savings. They argue it was designed to undo Prop 40. They call Prop 40 the California Billionaire Tax. They call Prop 42 a redundant and expensive trick. Opponents say Prop 40 applies only to billionaires. So, they say, ordinary people's retirement and savings are not at risk. They say billionaires funded Prop 42 so they can keep avoiding taxes. Opponents say the billionaire tax is a chance to keep hospitals open and health care affordable.