State Sen. Jerry McNerney (D-Pleasanton), Chair of the Senate Revenue and Taxation Committee, introduced Senate Bill 1406, which would close the loophole by expanding how the state determines a "company's" residency. California Gov. Gavin Newsom signed the law into law on Sept. 30.
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Gov. Gavin Newsom signed Sen. Jerry McNerney’s SB 1406, closing the so-called “Montana Loophole,” which costs California approximately $20 million a year in lost tax revenue.
SB 1406 cracks down on tax scams in which wealthy Californians create phony shell companies to buy luxury vehicles in Montana and other states to avoid paying California sales taxes and vehicle license fees.

Gov. Gavin Newsom today signed Sen. Jerry McNerney’s SB 947, the No Robo Bosses Act of 2026 — a groundbreaking new law that requires human oversight of artificial intelligence systems in the workplace to prevent abuses.
SB 947 bars California employers from relying solely on AI systems, known as automated decision-making systems (ADS), to fire or discipline workers. It also mandates human oversight and verification when employers use ADS to assist in termination and disciplinary decisions. It is the first such law in the nation.