Newsom signs 100% tax on state recipients of Trump 'slush fund' payouts

Naomi Taxay, The Sacramento Bee on Jun 30, 2026

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SACRAMENTO, Calif. — Gov. Gavin Newsom signed legislation Tuesday imposing a 100% tax on any payments distributed to California residents from President Donald Trump’s $1.776 billion “Anti-Weaponization Fund.”

The fund was established to settle Trump’s $10 billion lawsuit against the IRS following the leak of his tax returns. According to the Trump administration, the fund would compensate people harmed by politically motivated investigations or prosecutions, potentially including individuals charged or convicted in connection with the Jan. 6 Capitol riot.

Newsom proposed the tax — on what he called Trump’s “slush fund” — last month after the Trump administration announced its creation.

U.S. District Judge Leonie Brinkema initially blocked the fund in May to prevent taxpayer money from being distributed before the court could review the case. Acting Attorney General Todd Blanche later told lawmakers the Department of Justice was no longer moving forward with the fund but declined to submit a written declaration stating it had been formally rescinded. Brinkema subsequently extended the injunction indefinitely.

If the fund ultimately moves forward, California’s law would impose a 100% state tax on payments made to California recipients, effectively redirecting the money to state funds.

“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.

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