On November 5, 2024, residents across the United States voted on several state and local ballot measures affecting taxes on businesses and individuals. Among the rejected measures was an Oregon proposal that would have imposed a new 3% minimum tax on corporations' Oregon gross sales exceeding $25 million. Washington voters rejected a measure that would have repealed the state's capital gains tax. In North Dakota and South Dakota, voters did not support measures that would have prohibited taxation of certain property and sales, respectively.

Not all tax measures failed, however, as voters in Illinois approved an advisory question indicating support for a 3% surtax on individual income exceeding $1 million in order to lower property taxes.

At the local level, voters approved San Francisco Measure M, which, effective in 2025, substantially revises the city's business taxes, including rate changes and revisions to the calculation of several of the city's business-related taxes. Voters in both Berkeley and Santa Cruz, Calif., approved ballot measures to extend and impose new taxes on sugary drinks, respectively.

This Tax Alert provides a summary of select 2024 state and local tax ballot measures that passed and failed.¹ The projected results provided below, however, must still be certified by the respective Secretaries of State.

Approved ballot measures

California

Statewide: Proposition 35 permanently authorizes the existing tax on managed healthcare insurance plans, which was set to sunset in 2027.

Berkeley: Measure W, effective January 1, 2027, repeals the January 1, 2029 sunset date and makes permanent a 2.5% real property transfer tax on property valued between $1.6 million and less than $1.9 million. The measure also imposes a new 3% rate for properties valued between $1.9 million and less than $3 million and a 3.5% rate for property valued at $3.0 million or greater.

Berkeley: Measure Z repeals the January 1, 2027 sunset date and makes permanent the tax on sugary drink and sweeteners until repealed by voters.

Los Angeles: County Measure A repeals 2017 Measure H's 0.25% sales and use tax (currently set to expire in 2027) and replaces it with a 0.5% sales and use tax with no set sunset date.

San Francisco: Measure L imposes a new gross receipts tax ranging from 1% to 4.5% on certain transportation network companies and autonomous vehicle businesses. Because San Francisco Measure M was approved by more votes, Measure L will have no legal effect.

San Francisco: Proposition M (Prop M), effective January 1, 2025, drastically changes San Francisco's business taxes, including the gross receipts tax, the homelessness gross receipts tax, the overpaid executive gross receipts tax and the administrative office tax. Changes made by Prop M include, but are not limited to:

• Reducing the number of business activity classifications from 14 to seven for the gross receipts and homelessness gross receipts taxes, each with their own rate schedules
• Changing the gross receipts tax rates applicable to the new categories of business activities, with future rate increases
• Applying the homelessness gross receipts tax to business activities — the same business activity categories that apply to the gross receipts tax — with San Francisco gross receipts over $25 million
• Shifting the calculation of San Francisco gross receipts, so it is based more on sales and less on payroll expenses, depending on the type of business
• Increasing the small business exemption to the gross receipts tax to exempt a person or combined group with gross receipts within the city that do not exceed $5 million
• Establishing a small business exemption from the homelessness gross receipts tax
• Modifying the calculation of the overpaid executive gross receipts tax and who pays that tax and allowing for future rate changes

For a more detailed discussion of these, and other changes brought about by Prop. M, see Tax Alert 2024-1825.

Santa Cruz: Measure Z establishes a two-cents-per-fluid-ounce excise tax on the wholesale distribution of sugar-sweetened beverages in the City of Santa Cruz, such as soft drinks, sports drinks, slushies, sweetened ice teas and coffees, and energy drinks. Sugar-sweetened beverages do not include milk, all-natural fruit or vegetable juice, baby formula, beverages for medical use or as a meal-replacement, or alcoholic beverages, among other listed items. The tax will be paid by the distributor, not the consumer, and small businesses with less than $500,000 in gross annual revenue are exempt from the tax. The new tax will begin being collected on May 1, 2025.

Colorado

Statewide: Proposition JJ (HB 24-1436) allows the State to keep and spend all tax revenue from sports betting by removing the $29 million fiscal-year estimate that was included in the ballot question approved by voters in 2019. Excess revenue will fund water conservation projects instead of being refunded to casinos.

Denver: Ballot Issue 2Q imposes an additional 0.34% local sales and use tax on sales of currently taxable tangible personal property, products and services starting January 1, 2025. Revenue generated from the tax will be used to help "maintain and expand Denver Health and Hospital Authority Services."

Georgia

HB 808 (Georgia Laws 2024), effective January 1, 2025, increases the property tax exemption for all tangible personal property from $7,500 to $20,000. Under the exemption, all tangible personal property (except motor vehicles, trailers and mobile homes) will be exempt from all ad valorem taxation if the actual fair market value of the total tangible personal property owned by the taxpayer within a county does not exceed $20,000.

HR 598 creates the Georgia Tax Court. The Georgia Tax Court will serve as an independent court, vested with the judicial power of the State. Approval of HR 598 also allows HB 1267 (Georgia Laws 2024) to take effect. HB 1267 repeals the Georgia Tax Tribunal and (1) specifies the make-up, role and jurisdiction of the Georgia Tax Court; (2) authorizes the Tax Court to issue orders and opinions; and (3) outlines the process for filing a petition with the Tax Court. HB 1267 also lists which matters pending before the Georgia Tax Tribunal will and will not be transferred to the Georgia Tax Court. Taxpayers will be able to petition the Georgia Tax Court for relief starting August 1, 2026.

HR 1022 authorizes the General Assembly to establish a single, statewide homestead exemption from ad valorem taxes. The statewide exemption uniformly applies to each county, consolidated government, municipality or local school system (collectively, "political subdivision") beginning January 1, 2025. The General Assembly may (1) limit the application of the homestead exemption to political subdivisions that currently do not have such an exemption; and (2) prescribe methods for opting into or out of the exemption. Political subdivisions that do not opt out by March 1, 2025 will be subject to the statewide homestead exemption.

Illinois

Voters approved a nonbinding statewide advisory question, indicating support to amend the Illinois Constitution to create an additional 3% tax on income greater than $1,000,000. Funds from the rate increase would be dedicated to property tax relief.

Missouri

Amendment 2 modifies the state constitution to allow the Missouri Gaming Commission to regulate sports wagering (e.g., online sports betting, excursion gambling boats and professional sports betting districts). The amendment allows the imposition of license fees (retail license fee of up to $250,000 and mobile license fee of up to $500,000) and a 10% wagering tax on adjusted gross revenue from sports wagering. The Amendment applies to sports wagers beginning December 1, 2025.

Nevada

Question 5 exempts child and adult diapers from the state's sales and use tax, the Local School Support Tax Law and certain analogous taxes on retail sales. The exemption takes effect on January 1, 2025.

Washington

Seattle: Proposition 1 (Ordinance 127053) allows the City of Seattle to levy regular property taxes exceeding the limitation on levies under RCW ch. 84.55.010 for an eight-year period. The proposed increase applies to property taxes levied in 2024 through 2031, which are collected in 2025 through 2032. The current increase — the Levy to Move Seattle — expires at the end of 2024.

Wyoming

Amendment A creates a separate property class for residential real property, for purposes of property tax assessments. The measure also allows the legislature to create a new subclass of property of owner-occupied primary residence. This separate class of property allows the General Assembly to assign a separate rate for residential property tax assessments.

Failed ballot measures

California

Proposition 5 would have lowered the threshold for approving certain local bonds used to fund affordable housing, supportive housing, or public infrastructure and related property taxes to a 55% vote, rather than the two-thirds vote required by California's constitution.

Colorado

Denver: Ballot Issue 2R would have imposed an additional temporary 0.50% local sales and use tax beginning January 1, 2025 and ending on December 31, 2064. Revenue generated from the tax would have been used to help "expand and preserve affordable housing for low- and middle-income families and individuals … ."

North Dakota

Initiated Measure 4 would have prohibited all political subdivisions from taxing the assessed value of real or personal property.

Oregon

Starting in 2025, Measure 118 (formerly Initiative Petition 2024-17) would have imposed a new 3% minimum tax on corporations with gross sales exceeding $25 million. The new corporate minimum tax would have been in addition to the current minimum tax regime. The measure also would have amended treatment of S corporations under the minimum tax regime, removing the current $150 minimum tax limitation for S corporations with Oregon sales exceeding $25 million (see Tax Alert 2024-1250).

South Dakota

Ballot Measure No. 28 would have prohibited the state from collecting sales or use tax on anything sold for human consumption. According to the South Dakota Attorney General's explanation, this measure would not have prohibited the state from collecting sales or use tax on alcoholic beverages or prepared foods, or prevented municipalities from taxing food sold for human consumption.

Referred Law 21 asked voters to decide whether SB 201 should stay law (a "yes" vote) or be repealed (a "no" vote). A majority of voters responded "no," thus resulting in the repeal of SB 201, which had allowed a county to impose a pipeline surcharge of up to $1 per linear foot of carbon dioxide pipeline installed in the county during any tax year the pipeline company claims a federal tax credit for carbon dioxide sequestration.

Washington

I-2109 would have repealed the state's capital gains tax, which applies to certain long-term capital assets of individuals with over $250,000 in annual capital gains.

I-2117 would have repealed the state's cap-and-invest program, which was enacted in 2021, and prohibited state agencies from imposing a trading program for carbon tax credits.

I-2124 would have required employees and self-employed persons to elect to keep coverage under the state's long-term care insurance program.

Too close to call

San Diego: Measure E would allow the City of San Diego to impose a one-cent sales and use tax, which would increase the city's sales and use tax rate to 8.75% (from 7.75%).

Implications

With approval of Prop M in San Francisco, and its changes taking effect on January 1, 2025, businesses currently subject to San Francisco's gross receipts tax, homelessness gross receipts tax, overpaid executive gross receipts tax or administrative office tax should review the changes and consider how they will impact their San Francisco tax obligations.

Taxpayers doing businesses in a jurisdiction that extended or increased current, or approved new, transactional taxes will need to update their systems and processes to account for these tax changes.