Federal law shields wealthy tax avoiders from state retroactive taxes
H.R. 7619 — Keep Jobs in California Act of 2026 · Filed by Kevin Kiley (I-CA) · Introduced Feb 20, 2026 · Referred to committee
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What it does
This bill prohibits states from imposing retroactive taxes on the assets of people who do not live in that state. It specifically bars states from taxing nonresidents' assets for any period before the state's tax law was enacted, if those individuals were not residents at the time the law took effect. The bill appears designed to prevent California (or similar states) from collecting back taxes on wealth held by former residents or out-of-state individuals.
Why we flagged it
The bill's operative mechanism is a federal prohibition on state retroactive asset taxation targeting nonresidents. While framed as job protection, the functional effect is to shield wealthy individuals—particularly those who relocated from high-tax states—from retroactive tax liability on assets held before departure.
What the text implies
- Federal preemption of state tax authority: the bill uses federal law to override state sovereignty over taxation within state borders, a significant federalism shift that extends beyond the stated nonresident focus.
- Retroactive protection window: by prohibiting retroactive taxation only for periods before enactment, the bill creates a one-time amnesty for nonresidents with undeclared or untaxed assets, potentially shielding wealth transfers and estate planning maneuvers.
The full analysis lists 4 implications of this text.
Who stands to gain
high-net-worth individuals relocating from high-tax states; wealth management and tax planning firms; private equity and hedge fund managers