Democratic Governor Gavin Newsom vetoed a California bill that would have exempted future reparations payments from the state's personal income tax. Assemblymember Tina McKinnor, D-Inglewood, described the decision as a major setback for efforts to financially address historical injustices.
McKinnor told Fox News Digital that she is "deeply disappointed" by the veto of Assembly Bill 2186. In a statement, she argued that reparations are intended to repair harm rather than serve as a government handout. She stated that allowing the state to tax such payments would partially take back the compensation meant for those affected by slavery.
Newsom signed the veto on Sept. 30 as he processed a series of bills, including other legislation related to reparations. In his official veto message, Newsom acknowledged the intent behind McKinnor's bill but cited fiscal uncertainty as the primary reason for rejection. He noted that the full scope of the proposed tax exclusion is unknown, which he said warrants caution.
The governor warned that the proposed exclusion for unspecified federal initiatives could be interpreted broadly, leading to substantial fiscal uncertainty. Newsom added that given the potentially significant implications for the state's General Fund, the measure should be considered as part of the annual budget process rather than through standalone legislation.
Despite rejecting the tax exemption, Newsom signed another reparations-related measure into law. Assembly Bill 2599, authored by Assemblymember Isaac Bryan, D-Ladera Heights, requires large companies doing business in California to publicly disclose slavery-era transactions. The law applies to businesses with more than $100 million in annual worldwide gross receipts that existed on or before Dec. 31, 1964.
Under this new mandate, covered companies must submit sworn affidavits under penalty of perjury once funded by the Legislature. These affidavits must verify searches for historical records involving the purchase or sale of enslaved people, their use as loan collateral, and slave-related insurance policies. Companies will have until January 2029 to submit their first affidavits.
McKinnor's original bill was designed to exempt reparations benefits from state income tax for taxable years beginning on or after Jan. 1, 2028, and before Jan. 1, 2033. The bill defined these benefits as any monetary payment, grant, trust distribution, debt forgiveness, or other financial compensation provided through qualifying state, local, or federal reparations programs.
McKinnor maintained that reparations payments are compensation for generations of injustice and economic harm. She argued that California cannot claim to support reparative justice while taxing the very compensation intended to repair that harm. She stated her commitment to working with colleagues and the incoming governor to bring the legislation back in 2027.
California was the first state to establish a formal task force to study the legacy of slavery and recommend restitution measures. However, concrete direct-cash payout initiatives at the state level have stalled due to budget concerns and legal vulnerabilities. While localized programs in other areas, such as Evanston, Illinois, have provided housing grants, the broader future of state-funded reparations in California remains uncertain. When Fox News Digital reached out for a response to the veto, Newsom's office stated that the official message explains its position.