Lawmakers introduced a bill last week to extend a program that exempts wildfire survivors from paying taxes on certain disaster aid used to fund recovery costs.
Rep. Doug LaMalfa, R-Richvale, introduced the bipartisan Protect Innocent Victims of Taxation After Fire Extension Act, H.R. 5225, which would extend provisions of the Federal Disaster Tax Relief Act passed in December 2024. Rep. Mike Thompson, D-St. Helena, is a co-author.
The 2024 law exempted victims from taxes on payments for living expenses, lost wages, or compensation for injury, death or emotional distress related to federal disasters between 2020 and 2025.
The new bill would extend the protections through 2032. It would also let victims claim the exemption in the year they receive payments. Currently, victims must amend prior tax returns and wait for IRS refunds, LaMalfa said.
Both LaMalfa and Thompson said wildfire survivors should not be burdened with taxes or forced to wait months for funds they are entitled to.
“Californians are all too familiar with the devastation caused by wildfires. In the wake of losing their homes and livelihoods, it is wrong to tax survivors on settlement money that is meant to help them rebuild their lives,” said Thompson.