Full Breakdown
Democratic States Seek 100% Tax on Trump Settlement Fund
5/30/2026, 8:00:39 AM
100% Tax Bills Target Trump Settlement Fund
Democratic-led legislatures in California, New York, Illinois, Connecticut, New Jersey, Wisconsin and other states have introduced bills imposing a 100 percent state income tax on any payout a resident receives from the Justice Department’s “Anti-Weaponization Fund.” The proposals aim to eliminate any net benefit for state taxpayers.
Settlement Fund Background
Created on May 18 2026, the $1.776 billion fund stems from a settlement ending former President Donald Trump’s $10 billion IRS lawsuit. The Justice Department calls it compensation for “weaponization,” while critics label it a “slush fund” that could reward Jan. 6 participants.
Lawmakers and Legislative Schedule
Alex Bores filed the Anti-Insurrectionist Act in New York on May 22. Governor Gavin Newsom will embed a comparable tax in California’s June budget. Illinois Rep. Bob Morgan seeks inclusion in the FY 2027 budget by May 31. Connecticut Senate leader Bob Duff plans legislation for the January 2027 session, and Wisconsin’s Dianne Hesselbein has drafted a “Tax the Grift Act.”
Fiscal Impact
State officials estimate the tax could yield tens of millions for Illinois and similar sums elsewhere, depending on payout numbers and sizes. Bloomberg Tax notes individual awards may reach seven-digit amounts, and recipients would still owe ordinary federal income tax.
Official Positions and Legal Concerns
Governor Newsom said California will “tax 100 percent of those proceeds” to prevent a slush fund from benefiting residents. Rep. Morgan called the tax a safeguard against “enrichment for having participated in an insurrection.” Rep. Mike Flood warned the measure could violate constitutional protections, and legal scholar Joseph Bishop-Henchman warned that a 100 percent levy could be viewed as a taking under constitutional law.
Conflicting Information
Sources differ on the fund’s precise size—$1.776 billion versus $1.8 billion—and on how many claimants will ultimately receive payments. The Justice Department has not confirmed whether convicted Jan. 6 participants are eligible, and lawsuits by Capitol Police officers continue to challenge the fund’s legality.
Verbatim Quotes
- “It’s simple: If you’re a New Yorker who takes from Trump’s illegal January 6th slush fund, NY will tax 100% of it,” — Alex Bores, New York Assemblymember
- “Anyone from California that receives any of those funds, we want to tax 100 percent of those proceeds,” — Gavin Newsom, Governor of California
- “would mean that nobody’s getting enriched for having participated in an insurrection,” — Bob Morgan, Illinois Representative
- “But it would be hard to argue that a 100 percent tax is anything other than a taking,” — Joseph Bishop-Henchman, National Taxpayers Union Foundation
Next Steps
All seven states must pass their bills before upcoming legislative deadlines, after which the measures are likely to face constitutional challenges in state and federal courts. The DOJ continues to defend the fund’s legality, while Congress debates a parallel 100 percent excise tax at the federal level. The outcome will shape the fiscal and constitutional limits of state authority over federal settlement payouts.
