California Closed the Montana License Plate Loophole

California has closed a tax loophole that wealthy residents exploited for decades by registering vehicles to shell companies in Montana and other low-tax states. The new law, effective September 30, 2026, expands the definition of which business entities are subject to California's Sales and Use Tax and eliminates the previous 50% out-of-state ownership threshold, making any business with even one California resident owner liable for vehicle taxes. Officers and owners of shell companies can now be held personally liable for unpaid taxes and penalties.