The 2026 election saw state and local tax ballot measures that covered a broad swath of tax issues. Overall, voters generally favored limiting taxes, approving (or leading in favor of) income tax rate caps, higher legislative thresholds for income tax increases, and opposing California’s proposed billionaires’ wealth tax. At the same time, voters did not uniformly reject revenue measures, making California’s top income tax rates permanent, narrowly favoring a graduated income tax in Colorado, raising Colorado’s TABOR limit, and rejecting supermajority requirements for citizen-initiated taxes in California and Utah. Below outlines some of those measures in more detail and how they fared on election night, along with a brief summary of the mid-term’s impact on state tax administrators, including the statewide elections for the Comptrollers in Maryland and Texas.
Income and Wealth Tax Ballot Measures
California – Wealth Tax and Tax Rates
Proposition 40: This measure would create a one-time 5% tax on billionaires’ wealth and applies to all billionaires deemed residents as of January 1, 2026, based on their wealth as of December 31, 2026. The measure allows taxpayers to spread out the payments over five years, but if a taxpayer elects to use this option then “each subsequent annual installment payment … [is] subject to an annual nondeductible deferral charge of 7.5 [%] of the remaining unpaid balance.”
The disapproval of this measure is leading with 55% of the vote and 62% of votes counted.
Proposition 41: This measure would nullify state taxes enacted after January 1, 2026, that exempt their revenues from the voter-approved spending limit, also known as the Gann Limit. This measure would also require pre-election and recurring audits of programs funded by new special taxes. This measure also provides that if another measure appears on the same statewide election ballot and conflicts with this measure, this measure will prevail if it receives a greater number of affirmative votes. However, even absent that provision, this measure would nullify Proposition 40 (assuming Proposition 40 also passes) because that measure exempts that revenue from the Gann Limit.
The disapproval of this measure is leading with 52.90% of the vote and 61% of votes counted. However, things may change as the remaining ballots are counted.
Proposition 42: This measure prohibits any new state tax that (i) is imposed on the ownership of personal property (i.e., everything a person owns other than real estate), or (ii) applies retroactively based on the taxpayer’s past activities. Specifically, this measure would amend the California Constitution to prohibit a tax enacted on or after January 1, 2026, “on the ownership or control of retirement holdings, individually owned assets, and other forms of personal savings, whether held directly or indirectly.” This measure would also amend the California Constitution to prohibit a tax enacted on or after January 1, 2026, “that operates retroactively to result in tax liability based on conduct, activities, or a status that occurred or was present prior to the effective date of the state law or constitutional provision.” This measure also nullifies taxes enacted after January 1, 2026, that conflict with this measure. Although Proposition 40 is not mentioned, the intent of this measure is to prohibit Proposition 40 and subsequent efforts, absent another ballot measure.
The approval of this measure is leading with 53.8% of the vote and 61% of votes counted.
Proposition 3: In 2012, voters approved temporary increases to income and sales taxes; voters subsequently approved an extension of the increased income taxes through 2031. This measure makes California’s three top marginal individual income tax rates permanent rather than allowing them to expire after 2031.
This measure passed with 59% of voters approving it.
Colorado – Graduated Income Tax and Tax Rate Cap
Amendment 87: This measure would remove the constitutional requirement that the state income tax be set at a single flat rate for individuals and businesses. This measure would also replace the current flat income tax with a graduated state income tax. The proposed graduated rates begin at 3.7% for taxable income of $25,000 or less and reach 8.4% for taxable income over $1,000,000. Notably, the graduated rates would apply to both individuals and businesses. The additional revenue would be used on K-12 education, health care, and early childhood care and education.
The approval of this measure is narrowly leading with 50.7% of the vote and 89% of votes counted.
Proposition 136: This measure would set a cap on the state income tax rate for individual and corporate taxpayers at its current level of 4.4%. The Colorado General Assembly’s ballot information booklet states that if Amendment 87 and Proposition 136 both pass then “[g]enerally, when parts of voter-approved measures conflict, the policy outcome is determined by the measure that receives more votes. However, if both measures are approved by voters, the exact outcome is unclear. The state legislature or a court will determine how to resolve any conflicts.”
Iowa – Increased Threshold for Income Tax Rate Increases
The disapproval of this measure is leading with 52.40% of the vote and 88% of votes counted.
Amendment 1: This measure would require two-thirds of both chambers of the legislature to approve an increase to an individual or corporate income tax rate. The two-thirds vote requirement would also apply to the creation of new taxes on income or legal and special reserves.
This measure passed with 56% of voters approving it.
North Carolina – Income Tax Rate Cap
Amendment Reducing Income Tax Rate Cap: Currently, North Carolina has a 7% cap on the allowable income tax rate. This measure would reduce the cap to 3.5%.
This measure passed with 61.9% of voters approving it.
Washington – Millionaires’ Tax
Initiative 645: In early 2026, the legislature approved a 9.9% tax on annual individual income over $1 million. This so-called millionaires’ tax would be imposed beginning January 1, 2028. This measure would repeal that tax. More detail on the millionaires’ tax can be found here.
Disapproval of this measure is leading with 57.9% of the vote and 68% of votes counted. If the measure prevails, the tax will continue to face a legal challenge for violating the Washington Constitution.
Property Tax Ballot Measures
Florida – Homestead Exemption Expansion
Amendment 3: This measure makes several changes to how property taxes are imposed by local governments. Most notably, this measure creates a new homestead exemption for non-school taxes only for the first $150,000 of assessed value in 2027 and then $250,000 of assessed value in 2028. Afterwards, the exemption is increased based on inflation. There is a five-year homestead exemption on the first $50,000 of assessed value of homestead properties ($25,000 for school levies and $50,000 for non-school levies) for owners who are not permanent Florida residents as of December 31, 2026. Such property owners will receive the full homestead exemption as permanent Florida residents after five years. In the first year, it is expected that local non-school property tax revenues would decrease by $4.95 billion and in the following year revenues would decrease by $8.78 billion.
This measure has passed with 62% of the voters approving it.
North Carolina – Tax Levy Increase Cap
Amendment Requiring a Property Tax Levy Limit: This measure would require that the General Assembly enact a law “limiting the amount by which the levy of taxes on property may increase[.]” However, the General Assembly is also permitted to include exceptions. There is no requirement for how much the levy limit should be or what exceptions are allowed.
This measure has passed with 61.9% of the voters approving it.
Tennessee –Statewide Property Tax Prohibition
Constitutional Amendment 2: This measure amends the Tennessee Constitution to prohibit the state from levying, authorizing, or otherwise permitting a statewide property tax.
This measure passed with over 66% of voters approving it.
Sales and Use Tax Ballot Measures
Arizona – Grocery Limit on Local Transaction Privilege Tax
Proposition 316: This measure, which was proposed by the legislature, retroactively prohibits local governments from adopting or increasing a tax on groceries from July 1, 2025, through June 30, 2027. After June 30, 2027, it prohibits local governments from adopting or increasing a tax on groceries without voter approval and limits any new or increased tax to a maximum rate of 2%.
This measure passed with over 61% of voters approving it.
Miscellaneous Tax Ballot Measures
California – Increased Threshold for Local Special Taxes
Proposition 43: Currently, citizen-initiated local ballot measures creating, extending, or increasing local special taxes only require a simple majority of voters to be approved. This measure would require a two-thirds voter approval to see these local citizen-initiated special taxes enacted.
The disapproval of this measure is leading with 55.40% of the vote and 61% of votes counted.
Colorado – TABOR Limit Increase
Proposition NN: This measure would increase the Taxpayer’s Bill of Rights limit, which would allow the state to keep and spend that revenue that would otherwise be refunded.
This measure passed with over 55% of voters approving it.
Missouri – Endowment Fund to Eliminate Taxes
Amendment 7: This measure would establish a permanent public endowment fund with the interest from the fund eventually used to eliminate all state taxes. The fund would consist of money appropriated to it by the general assembly and could also receive gifts, donations, grants, and bequests from any source.
This measure was rejected with 60.5% of voters disapproving it.
Nebraska – Expansion to Online Sports Wagering
Initiative Measure 440: Currently, sports wagering is only legal at state-licensed racetracks. This measure would amend the Nebraska Constitution to authorize the enactment of laws allowing online sports wagering.
This measure was rejected with 54.9% of voters disapproving it.
Utah – Increased Threshold for Citizen-Proposed Taxes
Amendment B: This measure would amend the Utah Constitution to require that citizen-proposed laws that increase taxes would need to be approved by 60% of voters. Currently, such proposed laws only need to be approved by a simple majority.
This measure was rejected with over 62% of voters disapproving it.
Department of Revenue Elections
In addition to the direct impact of ballot measures on state taxes, the midterms also will affect the administration of taxes. Most state tax agency leaders are appointed by their respective governors. Given the results of the 2026 election, we will likely see changes in states – especially when executive branch control changed hands. However, there are a few exceptions to this general rule, where the head state tax administrator is separately chosen in a statewide election, most notably in Maryland and Texas:
- Maryland
The incumbent, Brooke Lierman (D), defeated Sonya Dunn (R) with 67% of the vote.
- Texas
The challenger, Sarah Eckhardt (D) defeated the incumbent, Don Huffines (R) with 51.3% of the vote. Also receiving votes were V. Alonzo Echavarria-Garza (L) (1.9%) and Shehla Faizi (G) (0.7%). As we have previously discussed, Comptroller Don Huffines recently proposed revising the data processing regulation so that fees charged by marketplaces would no longer be subject to sales tax as data processing. However, with his defeat, it is unclear what will now happen with respect to the data processing regulation.
Eversheds Sutherland’s SALT team will continue to monitor the results of the 2026 election, and will provide further updates as more winners are declared.
