Prop 42 Savings Tax Ban Passes in Major Victory for California Taxpayers

California taxpayers are celebrating a major victory after Proposition 42, a constitutional amendment banning new state taxes on personal savings and investments, was declared the winner in Tuesday's election.

"This is a huge victory for California taxpayers! Sacramento politicians have been looking for new ways to grab more of our hard-earned money, but Prop 42 sends a clear message: our savings and retirement investments are off limits to new state taxes on simply owning them," said Reform California Chairman and State Assemblymember Carl DeMaio.

The measure was one of three Save Prop 13 taxpayer protection initiatives backed by Reform California in the November election — and the first to secure a victory.

Prop 42 prohibits California politicians from imposing new state taxes on the ownership of personal financial assets, including savings accounts, checking accounts, stocks, and retirement investments such as 401(k)s. The measure also prohibits most new retroactive state taxes.

Democrats Killed ACA-14 — So DeMaio Took the Fight to Voters

DeMaio first proposed banning a Savings Tax in the State Legislature through ACA-14, his California Taxpayer Protection Act, which sought to prohibit taxes on savings, block an Exit Tax, restore the two-thirds vote requirement for local special taxes, and strengthen other taxpayer protections.

But in February, Assembly Democrats voted to kill ACA-14 — refusing to advance DeMaio's proposed protections.

Rather than abandon the fight, DeMaio and Reform California joined a statewide coalition supporting taxpayer protection initiatives and helped mobilize a signature-gathering effort to bring the issue directly to voters.

"Democrats had their chance to protect California taxpayers, and they refused. So we took the fight directly to the voters — and we won!" DeMaio said. "This victory proves that when Sacramento politicians refuse to listen, the people still have the power to fight back."

Major Victory in Fight Against New Tax Increases

DeMaio has repeatedly warned that proposals to tax accumulated wealth could eventually expand beyond billionaires and threaten the savings and retirement accounts of middle-class Californians.

"Democrat socialists have made creation of a Savings Tax one of their top money-grabbing priorities, but we have shut that down - permanently," DeMaio said.

While the November election brought disappointing results for Republicans in several key races, Prop 42's success represents a significant victory for Reform California's ongoing taxpayer protection efforts.

"This is exactly why we started Reform California — to fight back against the politicians who keep raising taxes and making our state unaffordable," DeMaio said. "Prop 42 is a major victory, but our work is far from over. We will continue fighting to defend Prop 13, block costly tax increases, and make California affordable again."

Learn more about Reform California’s Analysis of the 2026 Midterm Election Results  

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