SB-376 • 2026

Incomplete gift nongrantor trusts: Personal Income Tax Law.

Taxes

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Valladares
Last action: 2025-10-06
Official status: Chaptered by Secretary of State. Chapter 410, Statutes of 2025.
Effective date: Not listed

Plain English Breakdown

The official source material does not provide specific details on when the changes take effect, leaving this information uncertain.

Incomplete Gift Nongrantor Trusts: Personal Income Tax Law

This law clarifies that charitable remainder trusts are not considered incomplete gift nongrantor trusts for tax purposes.

What This Bill Does

Amends the definition of an 'incomplete gift nongrantor trust' to exclude charitable remainder trusts.

Who It Names or Affects

People who set up or manage incomplete gift nongrantor trusts, especially those involving charitable remainder trusts.
Tax authorities responsible for enforcing the Personal Income Tax Law.

Terms To Know

Incomplete Gift Nongrantor Trust: A type of trust where the person who created it (the grantor) is not treated as its owner, but under certain conditions, income from this trust can be included in the grantor's taxable income.
Charitable Remainder Trust: A trust that allows a donor to receive income for life or a set period while eventually transferring assets to a charity.

Limits and Unknowns

The bill does not specify when the changes take effect.
It only applies to trusts that qualify as charitable remainder trusts and does not affect other types of incomplete gift nongrantor trusts.

Bill History

2025-10-06 California Legislative Information
Chaptered by Secretary of State. Chapter 410, Statutes of 2025.
2025-10-06 California Legislative Information
Approved by the Governor.
2025-09-22 California Legislative Information
Enrolled and presented to the Governor at 2 p.m.
2025-09-11 California Legislative Information
Assembly amendments concurred in. (Ayes 40. Noes 0. Page 2882.) Ordered to engrossing and enrolling.
2025-09-10 California Legislative Information
In Senate. Concurrence in Assembly amendments pending.
2025-09-10 California Legislative Information
Read third time. Passed. (Ayes 79. Noes 0. Page 3170.) Ordered to the Senate.
2025-08-19 California Legislative Information
Read second time. Ordered to third reading.
2025-08-18 California Legislative Information
Ordered to second reading.
2025-08-18 California Legislative Information
Withdrawn from committee.
2025-07-15 California Legislative Information
Read second time and amended. Re-referred to Com. on APPR.
2025-07-14 California Legislative Information
From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 7. Noes 0.) (July 7).
2025-07-01 California Legislative Information
June 30 hearing postponed by committee.
2025-06-09 California Legislative Information
Referred to Com. on REV. & TAX.
2025-06-03 California Legislative Information
In Assembly. Read first time. Held at Desk.
2025-06-02 California Legislative Information
Read third time. Passed. (Ayes 38. Noes 0. Page 1387.) Ordered to the Assembly.
2025-05-20 California Legislative Information
Read second time. Ordered to third reading.
2025-05-19 California Legislative Information
From committee: Be ordered to second reading pursuant to Senate Rule 28.8.
2025-05-15 California Legislative Information
Set for hearing May 19.
2025-05-14 California Legislative Information
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.
2025-03-18 California Legislative Information
Set for hearing May 14.
2025-02-26 California Legislative Information
Referred to Com. on REV. & TAX.
2025-02-14 California Legislative Information
From printer. May be acted upon on or after March 16.
2025-02-13 California Legislative Information
Introduced. Read first time. To Com. on RLS. for assignment. To print.

Official Summary Text

SB 376, Valladares.
Incomplete gift nongrantor trusts: Personal Income Tax Law.
Existing law, the Personal Income Tax Law, in partial conformity with federal income tax law, imposes a tax on the taxable income of estates or of any kind of property held in trust. That law provides the taxable income of an estate or trust is computed in the same manner as in the case of an individual, except as provided, and the tax is paid by the fiduciary of the trust or estate. Existing law provides that, where the grantor or another person is treated as the owner of any portion of the trust, known as a “grantor trust,” then items of income, deductions, and credits against tax of the trust are included in computing the taxable income and credits of the grantor or other owner. Existing law, for taxable years beginning on or after January 1, 2023, includes the income of an incomplete gift nongrantor trust, as defined, in the gross income of the grantor to the extent the income of
the trust would be taken into account in computing the grantor’s taxable income if the trust were treated as a grantor trust, except as provided.
This bill would amend the definition of incomplete gift nongrantor trust to specifically exclude a trust, or portion of a trust, that qualifies as a charitable remainder trust, as specified. The bill would include findings and declarations that this change does not constitute a change in, but is declaratory of, existing law.

Current Bill Text

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