Luxury-car buyers who use 'Montana loophole' to dodge California taxes are target of new law
- Posted on October 6, 2026
- By Los Angeles Times
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- 1 min read
In brief
California's SB 1406 legislation targets high-end vehicle purchasers exploiting the Montana registration loophole to minimize tax obligations. Affluent buyers establish shell corporations in out-of-state jurisdictions while primarily operating their luxury vehicles within California borders. This regulatory measure aims to close tax avoidance strategies that deprive the state of significant revenue, establishing stricter ownership verification and residency requirements for vehicle registration.
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Luxury-car buyers who use 'Montana loophole' to dodge California taxes are target of new law
SB 1406 cracks down on residents who primarily use their vehicles in California, but create out-of-state shell companies to purchase and register them elsewhere to skirt taxes.
