Millionaires’ Taxes Around the U.S.

Washington Governor Bob Ferguson just signed a millionaires’ tax into law in his state. Earnings of over $1 million per year will be taxed at 9.9%. It’s the state’s first income tax.

The passage of the tax, and it being signed into law, has Weekly Industry News Editor Gary Wolcott curious about this kind of taxing in other U.S. states. His research on Google AI found some interesting facts.

• In 2023 Massachusetts put a 4% tax on income over $1 million
• Minnesota put a 1% tax on net investment income over $1 million in 2024
• New York City has very high taxes for high earners

Proponents of taxing high income earners are gathering signatures in California to put a one-time tax of 5% on the 200 to 300 people in the state with net worth of $1 billion or more. Pollsters say over half surveyed will vote yes if it gets on the ballot with 28% saying they’ll vote no.

In actual dollars, most high-earners in the millionaires category pay a larger amount federal taxes. The percentage, however, is often much lower than the rest of us because much of their actual income is from unrealized capital gains. A study in 2021 found the true tax rate for the 25 top billionaires in the U.S. is about 3.4% on $401 billion of income earned from 2014 to 2018.

An analysis of the top 1% earners in the country — those making $771,000 a year or more — pay somewhere between 25% and 30% in federal taxes depending on how unrealized gains were reported.

The Ultra-Millionaire Tax Act was reintroduced in Congress this year to put a 2% annual tax on the net worth of people making between $50 million and $1 billion a year. For those making over $1 billion, the proposed tax would be 3%.

As most tax proposals do, this one says a 1% to 5% wealth tax will put money into the coffers of important social programs. Opponents — as they always do — contend the tax will put a lid on a lot of investment, will hurt small business owners and disrupt the economy.

By the way, not all states have it in for millionaires. Some are actually reducing the tax load for the ultra wealthy. In 2025, Mississippi, Missouri, Ohio and Kansas passed tax cuts for millionaires. Mississippi and Oklahoma did away with those taxes completely saving millionaires and billionaires $1.2 billion in taxes.

Source link: Google AI — https://bit.ly/41EyXzu