States are considering millionaire taxes to target top earners, with 14 jurisdictions home to over half of the nation’s millionaire earners. Washington, Illinois, Pennsylvania, Rhode Island, Michigan, Virginia, and Hawaii have proposed various types of millionaire taxes. Washington aims to pass a 9.9% surcharge on income above $1 million. In Illinois, a 3% surcharge on income above $1 million is under consideration. Pennsylvania seeks to impose a 4% surcharge on income over $1 million. The proposals could impact nearly 100,000 additional millionaire earners nationwide.

Debates around millionaire taxes focus on potential millionaire flight, with critics warning of economic consequences while advocates cite data showing minimal impact on migration. IRS data reveals a 132% increase in millionaire earners from 2013 to 2022. California’s millionaire earners rose 139% after enacting a 1% tax on income above $1 million. New York saw slower millionaire growth, with just under 70,000 millionaires in 2022, taxed at 9.65% for income between $1 million and $5 million. New York City Mayor Zohran Mamdani proposes a 2% income tax increase for residents earning over $1 million to fund social services and close a budget gap, facing opposition from Gov. Kathy Hochul. Advisors discuss the potential impact of the proposed tax on ultrarich individuals, emphasizing the importance of considering factors beyond taxes, like family proximity and lifestyle choices. High earners, who often lead mobile lives and have homes in different locations, have more flexibility in relocating to lower-tax areas. Advisors recommend thorough preparation and understanding of clients’ options when considering a potential move.

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