The Overview

If your tribe-affiliated nonprofit acquires ancestral land in California, it no longer has to pay property tax or documentary transfer tax on that transaction. California's AB 2167 tax exemption law, formally titled "Property tax: documentary transfer tax: exemptions: nonprofit corporations chartered under tribal or federal law," became law when Gov. Gavin Newsom (D) signed it Sept. 27. ​

Property and transfer taxes have been identified as a significant financial barrier to tribal land reacquisition, according to a CalMatters commentary and a California Lawyers Association legal proposal. Those taxes can add thousands of dollars in upfront costs to a land transfer, pricing out smaller tribal entities even when a willing seller exists. The law took effect immediately as a tax levy.

What the Law Does

An earlier California law, AB 1485, had already exempted "tribal land return transactions" from the documentary transfer tax through Jan. 1, 2031, and extended a property-tax welfare exemption to land used for preserving natural resources or open space, but only when the land was owned by a federally recognized tribe or its wholly owned subsidiary. That left out a common legal structure: nonprofits chartered by a tribe under tribal law or federal law, which many tribes use to hold and manage land separately from tribal government.

The law extends the property-tax exemption for natural resources and open-space property to nonprofit corporations chartered by a federally recognized tribe under tribal or federal law, and to wholly owned tribal entities, and it expands the documentary transfer tax exemption for tribal land return transactions to cover land transferred to those same entities. In practice, that means a tribe can now route a land acquisition through its nonprofit arm and still receive the same tax treatment as the tribe itself.

To qualify as a "tribal land return transaction," the transfer must convey ownership in fee simple and include specified restrictive covenants. The bill widens the documentary transfer tax exemption for tribal land return transactions, which an earlier California law exempts until Jan. 1, 2031.

Legislative Status

Asm. Ali Macedo (R-CA-33) sponsored the bill and carried it without a single opposing vote at any recorded stage. An Assembly committee passed it 7-0 on April 27. A second Assembly committee passed it 15-0 on May 14. The full Assembly passed it 71-0 on May 21.

A Senate committee passed it 4-0 on June 24. The full Senate passed it 39-0 on Aug. 27, and the Assembly concurred in Senate amendments 77-0 on Aug. 31. The bill drew unanimous support in every chamber and every committee where a recorded vote was taken.

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