Policy And Economy News

California Law Ends 'Montana Loophole' for Luxury Vehicle Tax Evasion

California Governor Gavin Newsom signed SB 1406 on Sept. 30, 2026, closing a loophole that allowed residents to avoid sales tax on luxury vehicles by registering them through shell companies in states like Montana. The new law defines any business with a California resident owner as a California entity, regardless of where it is incorporated. It also holds individuals personally liable for unpaid taxes, penalties, and interest. The state estimates it lost over $20 million in revenue in the last two years from more than 2,500 such transactions.