Wealth Proceeds

Tax

The Wealth Proceeds Tax is basically an expanded capital gains tax: it taxes income from capital gains, dividends, interest, certain business profits, rents, royalties, and some annuity payments—but only for people with high incomes. Most of the tax is paid by millionaires.

This tax rate only applies to investment income over $200,000 (single) or $250,000 (married). Only the wealth proceeds above those amounts is taxed.

Since wealth proceeds are taxed at the federal level, states can “piggyback” on the existing federal form when creating their own wealth proceeds tax.
Minnesota successfully passed a wealth proceeds tax in 2023, set at a tax rate of 1%.

Figure 2. Wealth Proceeds Tax Revenue, Hawaiʻi, (2026)3

            300.0 M
            200.0 M
            100.0 M
            0.0 M
        
                    53.9 M
                
1% Rate

                    106.6 M
                
2% Rate

                    158.4 M
                
3% Rate

                    209.2 M
                
4% Rate

                    259.0 M
                
5% Rate