Protect Innocent Victims of Taxation After Fire Extension Act
Sen. Padilla Introduces Bipartisan Bill to End Federal Taxes on Wildfire Relief Payments
This bill is currently in the early stages of the legislative process and has been sent to the Senate Committee on Finance for review. It is considered active, but no future hearings or votes have been scheduled at this time. There is no companion bill currently associated with this legislation.
Part of: story →Passage Likelihood
Legislative Progress
Key Points
- This bill would make wildfire relief payments tax-free at the federal level. Any money people receive to cover losses, expenses, or damages from a federally declared wildfire disaster would not count as taxable income.
From policy text
“Gross income shall not include any amount received by an individual as a qualified wildfire relief payment.”
View in full text - The tax exclusion covers a wide range of payments, including money for additional living expenses, lost wages (not from your regular employer), personal injury, death, and emotional distress caused by a wildfire.
From policy text
“any amount received by or on behalf of an individual as compensation for losses, expenses, or damages (including compensation for additional living expenses, lost wages (other than compensation for lost wages paid by the employer which would have otherwise paid such wages), personal injury, death, or emotional distress)”
View in full text - The bill applies to wildfires declared as federal disasters after December 31, 2014, but the actual tax break only kicks in for payments received after December 31, 2025. This means it could help people still receiving settlements or relief for fires going back over a decade.
From policy text
“The term `qualified wildfire disaster' means any federally declared disaster (as defined in section 165(i)(5)(A)) declared, after December 31, 2014, as a result of any forest or range fire.”
View in full text - The tax break does not apply to insurance payouts or other payments that already covered the same losses. It also prevents a double benefit, so you cannot claim a tax deduction or credit for expenses already covered by these tax-free relief payments.
From policy text
“but only to the extent the losses, expenses, or damages compensated by such payment are not compensated for by insurance or otherwise.”
View in full text - The bill has bipartisan support, introduced by Senators Padilla, Lummis, Wyden, and Sheehy, and has been referred to the Senate Finance Committee.
From policy text
“Mr. Padilla (for himself, Ms. Lummis, Mr. Wyden, and Mr. Sheehy) introduced the following bill; which was read twice and referred to the Committee on Finance”
View in full text
Impact Analysis
Personal Impact
State Impacts
Milestones
Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S8514)
Sent to a congressional committee for expert review. The committee decides whether this bill moves forward.
Introduced in Senate
The bill was officially filed and given a number. It now enters the legislative queue.
Related News
2 articles
Bill honoring Doug LaMalfa would keep relief payments to wildfire victims tax-free
A bipartisan group of lawmakers reintroduced legislation in the U.S. House to keep wildfire disaster relief payments exempt from federal income taxes through 2032. The bill was named the Doug LaMalfa Protect Innocent Victims of Taxation After Fire Extension Act in honor of the late congressman.
Many 2020-2025 wildfire settlements to be retroactively tax-free
The article discusses the original Federal Disaster Relief Act of 2023 and notes that because the exclusion is temporary (expiring in 2025), it would take another act of legislation to extend the exclusion or make it permanent for victims still in litigation.
Source Information
Document Type
Congressional Bill
Official Title
Protect Innocent Victims of Taxation After Fire Extension Act
Data Sources
Sponsor
Cosponsors
(3)Analysis generated by AI. Always verify with official sources.