Gov. Gavin Newsom signed a fast-tracked law imposing a 100% California tax on payments any California resident receives from Donald Trump’s proposed $1.8-billion “anti-weaponization” settlement fund for political allies—aimed at preventing recipients from gett
When Gov. Gavin Newsom put his signature on a new tax law this week, it didn’t change the federal fight over Trump’s proposed “anti-weaponization” fund. But it did change what California would do if that money ever arrived.
Newsom signed a measure requiring a 100% state tax on any settlement fund payment Californians receive from Trump’s $1.8-billion “anti-weaponization” fund for his political allies. The proposal was unveiled in May. after Trump’s Justice Department said it would create a fund to compensate Trump’s allies who argue they have “suffered weaponization and lawfare” under the Biden Justice Department.
The plan has drawn sharp criticism from politicians on both sides of the aisle. Sen. Mitch McConnell (R-Ky.) described it as a “slush fund to pay people who assault cops.” Even now, the settlement fund remains in legal limbo.
Earlier this month, a federal judge in Virginia extended a court-ordered block on the plan—an action that critics warned could allow money to flow in ways that benefit people connected to the Jan. 6 attack.
Newsom’s tax plan moved quickly through the state legislature, fast-tracked into law as part of Senate Bill 122. The bill text directs California to impose “a tax on any settlement fund payment from the federal Anti-Weaponization Fund. or any subsequent fund. settlement. or agreement. as provided. at a rate of 100%.” The tax applies to all tax years between 2026 and 2030.
In a statement. Newsom’s office said the tax is designed so that. if Trump’s fund proceeds. California recipients won’t “receive favorable state treatment on those payments.” The statement also framed the decision as a defense of institutions: “We believe democracy is worth defending. the rule of law matters. and public dollars should support victims—not those who attacked the very institutions that protect our freedoms. ” Newsom said.
Legal experts said the idea is unusual but not necessarily barred. University of Southern California law professor Ariel Jurow Kleiman—an expert in tax law and policy—called Newsom’s approach a “novel legal strategy. ” while saying she believes there is “no categorical legal restriction” preventing California from implementing it.
Jurow Kleiman said states have “a wide degree of discretion” in how they design their tax systems. including how they define income. as long as they do not violate their constitutions. She added that if a California resident wanted to challenge the tax in court. they would need to show they were harmed by it to have standing to sue—meaning. practically. they would need to receive a payment from Trump’s settlement fund and then pay the 100% California tax.
That pathway depends on something that still hasn’t happened: unless the settlement fund is established and starts distributing payments, that kind of legal challenge is unlikely.
There are other precedents for punishing very high incomes. Jurow Kleiman pointed to proposals to levy a 100% tax on income above certain thresholds—citing that Sen. Bernie Sanders (I-Vt.) in 2023 said he supports a 100% tax on income exceeding $1 billion. But she said she is not aware of any governments that have adopted a policy structured in the specific way Newsom’s bill is.
For now, Newsom’s signature places a heavy price tag on any federal payout that might eventually make its way into California residents’ hands. Whether that money ever appears—and whether it can survive the ongoing legal hurdles—remains the central question.
Gavin Newsom 100% tax California Senate Bill 122 Anti-Weaponization Fund Trump settlement fund Mitch McConnell court-ordered block Virginia judge Jan. 6 rioters Ariel Jurow Kleiman