PRIA Logo™
CaliforniaSB 3762025-2026 Regular SessionSenateWALLET

Incomplete gift nongrantor trusts: Personal Income Tax Law.

Sponsored By: Suzette Martinez Valladares (Republican)

Signed by Governor

Your PRIA Score

Score Hidden

Personalized for You

How does this bill affect your finances?

Sign up for a PRIA Policy Scan to see your personalized alignment score for this bill and every other piece of legislation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.

Free to start

Bill Overview

Analyzed Economic Effects

3 provisions identified: 0 benefits, 1 costs, 2 mixed.

Grantors taxed on incomplete gift trusts

For tax years that begin on or after January 1, 2023, if you are the grantor of an incomplete gift nongrantor trust, you include the trust’s income in your California gross income as if it were a grantor trust. You do not include that income for a year when all three happen: the fiduciary timely files the original California Fiduciary Income Tax Return and makes an irrevocable election on that return to be taxed as a California resident nongrantor trust; the trust is a nongrantor trust; and at least 90% of its distributable net income goes to 501(c)(3) charities. These rules apply to qualified taxpayers, which means the grantors.

New tax rules for trust payouts

Beginning January 1, 2023, payouts from an incomplete gift nongrantor trust follow the same California tax rules that apply to distributions from grantor trusts. This can change how much beneficiaries or fiduciaries must report and pay.

Who is covered and faster trust guidance

Starting January 1, 2023, the law defines which trusts these rules cover. A covered trust is not a grantor trust and was funded by a transfer treated as an incomplete gift under federal law; charitable remainder trusts are excluded. The “qualified taxpayer” is the grantor. A resident nongrantor trust is taxed on all its income based on the residency of the fiduciary or beneficiary. The tax agency may issue rules and guidance without the normal notice-and-comment process, so instructions can come faster.

Sponsors & Cosponsors

Sponsor

  • Suzette Martinez Valladares

    Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 169 • No: 0

Senate vote • 9/11/2025

Item 62 — Senate SFLOOR

Yes: 40 • No: 0

House vote • 9/10/2025

Item 38 — Assembly AFLOOR

Yes: 79 • No: 0

legislature vote • 7/7/2025

Vote in CX19

Yes: 7 • No: 0

Senate vote • 6/2/2025

Item 63 — Senate SFLOOR

Yes: 38 • No: 0

legislature vote • 5/14/2025

Vote in CS83

Yes: 5 • No: 0

Actions Timeline

  1. Chaptered by Secretary of State. Chapter 410, Statutes of 2025.

    10/6/2025Senate

  2. Approved by the Governor.

    10/6/2025legislature

  3. Enrolled and presented to the Governor at 2 p.m.

    9/22/2025legislature

  4. Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2882.) Ordered to engrossing and enrolling.

    9/11/2025Senate

  5. In Senate. Concurrence in Assembly amendments pending.

    9/10/2025Senate

  6. Read third time. Passed. (Ayes 79. Noes 0. Page 3170.) Ordered to the Senate.

    9/10/2025House

  7. Read second time. Ordered to third reading.

    8/19/2025House

  8. Ordered to second reading.

    8/18/2025House

  9. Withdrawn from committee.

    8/18/2025House

  10. Read second time and amended. Re-referred to Com. on APPR.

    7/15/2025House

  11. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (July 7).

    7/14/2025House

  12. June 30 hearing postponed by committee.

    7/1/2025House

  13. Referred to Com. on REV. & TAX.

    6/9/2025House

  14. In Assembly. Read first time. Held at Desk.

    6/3/2025House

  15. Read third time. Passed. (Ayes 38. Noes 0. Page 1387.) Ordered to the Assembly.

    6/2/2025Senate

  16. Read second time. Ordered to third reading.

    5/20/2025Senate

  17. From committee: Be ordered to second reading pursuant to Senate Rule 28.8.

    5/19/2025Senate

  18. Set for hearing May 19.

    5/15/2025Senate

  19. From committee: Do pass and re-refer to Com. on APPR. (Ayes 5. Noes 0. Page 1082.) (May 14). Re-referred to Com. on APPR.

    5/14/2025Senate

  20. Set for hearing May 14.

    3/18/2025Senate

  21. Referred to Com. on REV. & TAX.

    2/26/2025Senate

  22. From printer. May be acted upon on or after March 16.

    2/14/2025Senate

  23. Introduced. Read first time. To Com. on RLS. for assignment. To print.

    2/13/2025Senate

Bill Text

  • Chaptered

    10/6/2025

    HTML

  • Enrolled

    9/16/2025

    HTML

  • Amended Assembly

    7/15/2025

    HTML

  • Introduced

    2/13/2025

    HTML

Related Bills

Back to State Legislation