A millionaire tax is a state-level surcharge or elevated bracket that applies only to income above a high threshold, most commonly $1 million. As of 2026, seven jurisdictions impose one: California, Massachusetts, New Jersey, New York, the District of Columbia, Maryland, and Minnesota. Washington signed its own version into law in early 2026, but it doesn’t take effect until 2028. The rates, thresholds, and what counts as taxable income differ enough that two high earners with identical paychecks can owe very different amounts depending on where they live.
How the Surcharge Actually Works
Every millionaire tax uses marginal rates. It sits on top of a state’s regular brackets and only touches income above the threshold. If a state adds a 4% surcharge on income over $1 million and you earn $1.2 million, only the $200,000 above the line is hit with the extra rate. The first million is taxed the same way it would be for anyone else.
This is not a wealth tax. Wealth taxes target what you own, regardless of whether it produced income. A millionaire tax only looks at what you earned during a single tax year: wages, business profits, investment gains, and other taxable income. Your net worth could be $10 million, but if your taxable income stays below the threshold, the surcharge doesn’t apply.
States With a Millionaire Tax in 2026
California
California’s top marginal rate is 13.3%, the highest in the country. The regular brackets reach 12.3% at roughly $700,000 for single filers, and a 1% Mental Health Services surcharge applies to taxable income above $1 million. Workers also owe a 1.3% state disability insurance payroll tax with no wage ceiling, which effectively brings the top rate on wage income to 14.6%.
Massachusetts
Massachusetts voters approved a constitutional amendment in 2022 creating a flat 4% surtax on taxable income above a threshold that adjusts each year for inflation. For tax year 2025, the threshold was $1,083,150. Combined with the state’s 5% flat base rate, high earners face 9% on income above that line.1Mass.gov. Massachusetts 4% Surtax on Taxable Income The inflation indexing is unusual; most other states use a fixed dollar figure.
New Jersey
New Jersey applies a 10.75% top rate to taxable income over $1 million.2State of New Jersey. Division of Taxation Income Tax Rates There’s no separate surcharge; the state simply sets its highest bracket at the $1 million mark. That structure has been in place since 2020.
New York
New York uses three tiers above $1 million for single filers. Income between roughly $1 million and $5 million is taxed at 9.65%, income between $5 million and $25 million at 10.3%, and income above $25 million at 10.9%.3Office of the New York City Comptroller. The NYC Personal Income Tax Before and After the Pandemic New York City residents pay an additional city income tax on top, with a top city rate of 3.876%, pushing the combined state-and-city rate well above 14%.
District of Columbia
DC imposes 10.75% on taxable income above $1 million, matching New Jersey’s top rate.4Office of Tax and Revenue. DC Individual and Fiduciary Income Tax Rates
Maryland
Maryland added a new top state bracket for 2026: 6.5% on taxable income above $1 million for single filers, or above $1.2 million for joint filers.5Comptroller of Maryland. 2026 Maryland State and Local Income Tax Withholding Information Maryland is unusual because of its county “piggyback” tax, which adds up to 3.3% on top of the state rate depending on where you live. A high earner in a maximum-rate county would owe a combined 9.8% on income in the top bracket. Maryland also introduced a separate 2% surcharge on capital gains for taxpayers with federal adjusted gross income above $350,000.
Minnesota
Minnesota took a narrower approach. Since 2024, the state imposes a 1% tax on net investment income above $1 million. It covers interest, dividends, capital gains, annuities, and royalties, but not wages or business income. The definition mirrors the one used for the federal Net Investment Income Tax, which makes the calculation straightforward for taxpayers already tracking that figure.
Washington (Effective 2028)
Governor Bob Ferguson signed Senate Bill 6346 into law on March 30, 2026, creating a tax on income over $1 million.6Governor of Washington. Governor Ferguson Signs Millionaires Tax Into Law It does not take effect until January 1, 2028, and legal challenges are expected. Washington has no traditional income tax, so this represents a significant shift. The first $1 million of income is excluded, and the tax does not apply to assets like homes or property.
What the Math Looks Like
Because these surcharges are marginal, the effective rate is always lower than the headline number. Take a Massachusetts resident with $1.3 million in taxable income for 2025. The first $1,083,150 is taxed at the standard 5% flat rate, producing $54,157.50 in base state tax. The remaining $216,850 above the surtax threshold gets the additional 4%, adding $8,674. The total state bill comes to roughly $62,832, an effective state rate of about 4.83%, not 9%.1Mass.gov. Massachusetts 4% Surtax on Taxable Income
Someone earning $1,050,000 in the same state would pay the surtax on less than $17,000, adding under $700 to their bill. The closer you sit to the threshold, the smaller the practical impact.
Federal Surcharges That Stack on Top
The federal government doesn’t label anything a “millionaire tax,” but two federal surcharges specifically target high earners, and both stack on top of state obligations.
The 0.9% Additional Medicare Tax applies to wages and self-employment income above $200,000 for single filers or $250,000 for joint filers.7Internal Revenue Service. Topic No. 560, Additional Medicare Tax Employers withhold it once wages pass $200,000 within a calendar year, though the final liability depends on filing status.
The 3.8% Net Investment Income Tax hits investment income — interest, dividends, capital gains, rental income, and certain business income — when modified adjusted gross income exceeds the same thresholds.8Office of the Law Revision Counsel. 26 USC 1411 – Imposition of Tax For a high earner with substantial investment income living in California or New York, the combined federal and state marginal rate on investment income can approach or exceed 50%.
The SALT Cap Changes the Real Cost
The federal state and local tax deduction lets itemizers write off state income taxes against their federal taxable income. Since 2018, the Tax Cuts and Jobs Act has capped that deduction at $10,000 per return, or $5,000 for married filing separately.9Congress.gov. The SALT Cap: Overview and Analysis That cap was scheduled to expire at the end of 2025, which would restore the unlimited deduction for 2026 and beyond, but only if Congress didn’t extend it as part of broader tax legislation.
For anyone paying a millionaire tax, the SALT cap changes the after-tax cost significantly. A New York City resident in the top bracket might owe well over $100,000 in combined state and city income taxes. Without the cap, all of it could be deducted against federal income. With the cap, only $10,000 is deductible, and the rest is a pure cost. Anyone planning around a millionaire tax needs to know the current status of the SALT cap for their tax year.
When You Earn in More Than One State
High earners who live in one state and earn income in another can face millionaire-tax exposure in more than one place. Your home state taxes all your income; other states tax only the income you earned within their borders. A New Jersey resident who earns $500,000 from a New York-based employer has both states with a claim on that income.
Most states provide a credit for taxes paid to other states to prevent true double taxation. Your home state calculates what you owe on your total income, then credits the taxes another state collected on the same dollars. The credit typically can’t exceed what your home state would have charged, so if you live in a low-tax state and work in a high-tax one, you may still come out ahead. If you live in a high-tax state, the credit from a lower-tax work state won’t fully offset your home-state liability.
This gets tricky when millionaire-tax thresholds differ between states, or when one state has a surcharge and the other doesn’t. Someone earning $2 million across two states could cross the threshold in both jurisdictions, with each calculating its surcharge independently. Remote work has complicated matters further; several states have asserted the right to tax nonresident remote workers, creating overlapping obligations that credits only partially resolve.
Estimated Payments and Underpayment Penalties
A millionaire-tax surcharge usually isn’t captured by standard payroll withholding, so high earners generally need quarterly estimated tax payments to avoid penalties. The federal safe harbor requires paying the lesser of 90% of your current-year tax or 100% of your prior-year tax. If your adjusted gross income exceeded $150,000 in the prior year, that second figure jumps to 110%.10Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty Most high earners will need to meet the 110% threshold.
State rules follow a similar pattern. Many require quarterly payments and impose underpayment interest that typically runs 7% to 11% annually. The federal underpayment rate for the first quarter of 2026 is 7%, compounded daily.11Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 Because a millionaire tax often creates a sharp jump in liability from one year to the next, especially for someone who crosses the threshold for the first time due to a one-time event like selling a business, the estimated-payment obligation catches many taxpayers off guard.