California billionaire tax · 2026

Leaving California won’t work. Planning still can.

The proposed California billionaire tax is a one-time 5% excise tax on net worth, and it’s heading to voters this fall. Residency is already locked in, but your net worth isn’t measured until December 31, 2026. Here’s what counts, what doesn’t, and how to use the time that’s left.

Talk to a tax advisor → How net worth is measured
Valuation, structuring and audit-ready documentation, all under one roof.
A plain-English walkthrough of residency, valuation, exclusions and planning before year end.
5%
One-time excise tax on net worth
Jan 1
2026 residency date, already passed
Dec 31
2026 measuring date for your net worth
100%
Of taxpayers are audited under the act
Time remaining to plan before net worth is measured on December 31, 2026
--Days
--Hours
--Minutes
--Seconds
Why moving isn’t the answer

That ship has already sailed

If you ask your friends, the first thing they’ll tell you is to move. But the act’s residency date is January 1, 2026, so for anyone already in California, leaving is largely no longer a viable plan. The real question now is what your net worth will be on December 31.

  1. January 1, 2026

    Residency is locked

    California residents on this date are within the scope of the tax. Relocating after the fact doesn’t change that.

  2. Now: the planning window

    Valuation and structuring

    Determine whether you truly qualify, then restructure assets and liabilities to lawfully reduce reportable net worth.

  3. December 31, 2026

    Net worth is measured

    Assets minus liabilities, as of year end. Anything you want reflected has to be in place by this date.

  4. After filing

    Every taxpayer is audited

    The act requires 100% of people who pay the tax to be audited, so the paperwork behind your valuation matters as much as the number.

How net worth is measured

Are you actually a billionaire?

You’d think you would know. It isn’t quite that simple. The tax applies to net worth, and what the act counts as an asset is where the planning begins.

Assets−Liabilities=Net worth × 5%
+

Counted as assets

Included in your net worth calculation.

  • Stock portfoliosEasy to value: shares held × fair market value.
  • Private company interestsValued on a book-value basis, not your last round’s headline valuation. More on this below.
  • Collectibles above $5 millionArtwork, car collections and other collectibles share a combined $5 million exemption.
−

Excluded from the calculation

Not counted as assets under the act.

  • Real propertyReal estate is excluded as an asset, though debt against it still counts as a liability.
  • Retirement plansIRAs, 401(k)s, pensions and non-qualified deferred compensation plans.
  • Tangible property outside CaliforniaTruck fleets, equipment, medical equipment and similar property located out of state.
  • The first $5 million of collectiblesNot a lot at this level, but every little bit helps.
For founders

You may be worth less than you think

If your next capital raise implies the company is worth $3 billion, you might assume you’re in trouble. Not necessarily. For private companies, the act looks at the balance sheet, not the term sheet.

  1. Start with book value: assets minus liabilities on the company’s balance sheet.
  2. Adjust using the average of the company’s net income over the prior two years.
  3. Multiply by your ownership percentage.
What the market says
$3B round valuation
The number founders tend to anchor on.
What the act measures
Book value × ownership
Many startups run at a loss rather than net income, so this figure can land far below the headline valuation.
Planning before December 31

Ways to lawfully reduce reportable net worth

Structuring assets and liabilities the right way can significantly reduce your net worth as it pertains to the billionaire tax. A few of the levers we look at:

01

Real estate and its debt

Real property is excluded as an asset, but the debt associated with it still counts. Structures that keep the asset out and the liability in drive valuation down.

02

Flip guaranteed company debt

If you guarantee debt for several companies, call the bank and turn the page: become primarily liable and let the company guarantee you. It becomes a subtraction on your balance sheet.

03

Retirement and deferred comp

IRAs, 401(k)s, pensions and non-qualified deferred compensation are excluded. There may be ways to contribute more and remove that value from the calculation.

04

Property outside California

Tangible personal property located outside the state, such as fleets, equipment and medical equipment, isn’t counted as your asset.

05

Collectibles exemption

Artwork, car collections and other collectibles share a combined $5 million exemption. Modest at this scale, but it should be captured.

06

Audit-ready documentation

Every taxpayer will be audited. We build the valuation support and paperwork alongside the planning, so you’re prepared when it comes.

100% of the people who pay this tax will be audited. So find a good advisor who can help you do the valuation and do the planning.

Rich Hofmann
Rich Hofmann, CPA, JDExecutive Vice President of Tax, Neil Jesani Advisors
Your in-house team

Meet some of your future tax advisors

CPAs, attorneys and enrolled agents who handle valuation, structuring and audit defense together, not across three different firms.

Neil Jesani

Neil Jesani, CFP®, MAcc

President & CEO

Rich Hofmann

Rich Hofmann, CPA, JD

Executive Vice President of Tax

Raniya Jesani

Raniya Jesani, IRS EA

Tax Manager

George Scopetta

George Scopetta, JD

VP of Tax & CFO Services

Larry McDermot

Larry McDermot, CPA

Senior Tax Director

Richard Phillips

Richard Phillips, JD

Senior Director of Tax & Estate Planning

Kevin Taylor

Kevin Taylor, JD, MBA

Director of Tax & CFO Services

Cody Dinda

Cody Dinda, CPA, EA, MST

Senior Manager of Taxes & CFO Services

Leslie Borgia

Leslie Borgia, JD

Senior Tax Manager

Waheeda Ghani

Waheeda Ghani, JD, LLM

Director of Tax & Advisory

Andres Pfefferkorn

Andres Pfefferkorn, CPA

Director of CFO Services

Seth Komitzky

Seth Komitzky, JD, LLM

Director of Tax & Advisory

Theodore Clarke

Theodore Clarke, JD, LLM

Director of Tax & Advisory

Patrick Gibbons

Patrick Gibbons, JD, LLM

Director of Tax & Advisory

Aaron Browning

Aaron Browning, CPA

Director of Transaction Advisory Services

Strategic board of advisors

Board of advisors

Our advisors bring decades of experience across business, technology, government, finance and national leadership.

Nikki Haley

Nikki Haley

Former Governor of South Carolina & U.S. Ambassador to the United Nations

116th Governor of South Carolina, former U.S. Ambassador to the United Nations, and two-time New York Times bestselling author. Named one of the 100 most influential people in the world by Time magazine.

Read full bio
Brian Krzanich

Brian Krzanich

CEO of Cerence AI & Former CEO of Intel Corporation

President and CEO of Cerence and former CEO of Intel Corporation. Engineer and business executive with 40+ years leading some of the world's most consequential technology companies.

Read full bio
H.R. McMaster

H.R. McMaster

Lieutenant General, U.S. Army (Ret.) & 25th U.S. National Security Advisor

Fouad and Michelle Ajami Senior Fellow at the Hoover Institution, Stanford University. Served 34 years as a commissioned U.S. Army officer, retiring as Lieutenant General after serving as the 25th assistant to the president for National Security Affairs.

Read full bio
Roger W. Ferguson, Jr.

Roger W. Ferguson, Jr.

Former President & CEO of TIAA & Vice Chairman of the U.S. Federal Reserve

Immediate Past President and CEO of TIAA and former Vice Chairman of the Board of Governors of the U.S. Federal Reserve System. Steven A. Tananbaum Distinguished Fellow for International Economics at the Council on Foreign Relations.

Read full bio
Brian Cornell

Brian Cornell

Executive Chair & Former CEO of Target Corporation

Executive Chair of Target's Board of Directors and former CEO, credited with transforming the brand into a $100 billion omnichannel retailer. More than four decades of senior leadership across Target, PepsiCo, Sam's Club, and Michaels.

Read full bio
Before December 31

Plan now. Be ready for the audit.

Talk with one of our advisors about where you stand and what can still be done between now and year end.

  • Confirm whether you qualify, including private company valuation
  • Structure assets and liabilities ahead of the December 31 measuring date
  • Build the valuation file you’ll need when the audit comes

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