2026 Mid-Year Update: State and Local Wealth Tax Developments
In-house counsel for high-net-worth individuals and entities holding high-value real estate across multiple U.S. jurisdictions must track these developments to avoid noncompliance with new and proposed wealth tax rules carrying steep penalties.
As of mid-2026, New York City’s pied-à-terre tax on non-primary high-value residences is effective, with proposed rules establishing primary residency presumptions, audit authority, and penalties up to 300% of underpaid tax. Rhode Island has enacted a phased 3% millionaire income surtax and a statewide tax on non-owner-occupied residential property assessed at $1 million or more, both taking effect in 2026. California voters will decide in November 2026 on a one-time 5% billionaire wealth tax, while Connecticut is considering a tiered statewide mansion tax on residential property assessed above $3 million. In-house counsel should review client real estate ownership structures, confirm primary residency documentation, and assess state tax exposure for high-value assets to mitigate compliance risk.