California Governor Gavin Newsom signed AB 1633, a first-in-the-nation 25 percent tax on private detention facilities that reaches all eight ICE detention centers in the state, effective July 1, 2028.
California Governor Gavin Newsom signed a first-in-the-nation law that slaps a 25 percent tax on the gross income of private detention facilities, a move aimed squarely at the eight Immigration and Customs Enforcement (ICE) detention centers operating in the state. The bill, AB 1633, was among roughly 20 measures Newsom signed on Tuesday as part of a package he billed as a pushback against President Donald Trump's immigration enforcement. In announcing the signing, Newsom framed the tax as a workaround after the state could not shut the facilities outright. "If we can't kick out private facilities, we'll go after their profits," he said.
The measure applies a 25 percent tax to the gross income of any private detention facility, and it reaches operators holding contracts with federal, state, and local governments. Revenue collected under the law flows into a newly created "Due Process for All Fund," which the bill designates for immigration-related services. Because the bill targets gross income rather than profit, it is built to bite even when a facility's margins are thin.
California is home to eight ICE detention facilities, and each relies on a private operator that would fall under the new tax. Newsom's office described the levy as the first of its kind anywhere in the country. The law takes effect on July 1, 2028, leaving more than a year of runway before the first dollar is collected.
Newsom's stated aim is to drive private contractors out of the immigration detention business in California, even though the state cannot directly halt federal enforcement on its own. "We may not be able to dictate federal immigration policy, but we can make clear that activities taking place in California will be subject to California law," he said.
The levy was not the only piece of Tuesday's signing slate. Newsom also approved a first-in-the-nation shock-glove ban that bars local, state, and federal officers from using gloves capable of delivering electric shocks, paired with measures his office said would protect access to state courts for immigrants. Together, the bills amount to California's most aggressive attempt yet to raise the cost of federal immigration enforcement inside its borders.
Newsom's office cast the package as a defense of communities and a check on what it called the privatization of federal enforcement. That framing sets up a direct collision with the administration, which has expanded detention capacity nationwide and leaned on private contractors to hold detainees while deportation cases move through the courts.
The timing places the fight in the middle of a midterm election year in which immigration enforcement has become a central dividing line between the parties. California's move gives Democrats a template for resisting federal policy without direct control over it, and it gives Republicans a ready-made argument that blue states are willing to tax federal enforcement itself.
Immigration policy analysts warn that hitting facility revenue could push contractors to walk away from California entirely, shrinking the space available to hold detainees in a state that accounts for a meaningful share of the federal system's beds. Hans von Spakovsky, a senior legal fellow at Advancing American Freedom, said the tax has one clear purpose: to make sure the federal government cannot find a private landlord willing to lease space in California.
"The alternative for the federal government is to look at all the different federal properties that the government actually owns out there, over which neither Newsom or anybody else in California can impose any kind of tax," Spakovsky said. He noted that unused warehouses and office space could be converted into detention space, and pointed to federal figures showing ICE has capacity for roughly 66,000 detainees nationwide.
If the eight California operators decided the 25 percent levy made business untenable, the state's contribution to that total could vanish, forcing the agency to rebuild capacity elsewhere or repurpose federal property it already controls. That outcome would not end detentions, but it would reroute them across state lines and stretch the system at the margins.
The two-year runway before the tax takes effect gives both sides room to maneuver. Court challenges are likely, given the unusual structure of a state levy aimed at the economics of federal contracting. Contractors, meanwhile, must weigh whether to absorb the tax, pass the cost to the government, or exit California altogether.
Watch whether ICE moves to expand federally owned detention space in the state or redirects detainees across state lines, and whether other blue states copy California's template. The law stands today as the clearest example yet of a state trying to price private immigration detention out of existence -- and as a fresh test of how far a state can go in taxing the machinery of federal enforcement.
California Governor Gavin Newsom signed AB 1633, a first-in-the-nation 25 percent tax on private detention facilities that reaches all eight ICE detention centers in the state, effective July 1, 2028.
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