Press Release
Posted:
Washington – Today, Rep. Mike Thompson (D-CA-04) announced that President Biden has signed the bipartisan Federal Disaster Tax Relief Act (H.R. 5863) into law. The bill includes Rep. Thompson’s legislation that exempts thousands of qualified wildfire victims in California from having to pay federal income tax on their settlement money or pay tax on attorney fees included in the settlement. This relief applies retroactively to qualified victims.
“Federally declared wildfires in 2015, 2017, and 2018 devastated entire communities across my district and across the state of California. Entire towns were destroyed. Thousands of people lost homes, and dozens of people lost their lives.
“While the courts eventually created a path to compensation, victims were subjected to unfair taxes on their settlement money—money that is meant to help them rebuild their lives.
“In my time working on this issue, I have yet to encounter a single person on either side of the aisle who believes this is fair. Today marks the day we finish righting this wrong.
“Thank you, President Biden, for signing my legislation into law. While no fire victim can ever be made truly whole, this law will provide needed and deserved relief to thousands in our community and across our country,” said Thompson.
BACKGROUND
Rep. Thompson serves as the Ranking Member of the Subcommittee on Tax for the Ways and Means Committee. He introduced the original legislation with Rep. Doug LaMalfa (CA-01) in the House of Representatives to provide tax relief to PG&E fire victims in the 117th Congress and has worked with Senator Padilla and Rep. LaMalfa to advance the legislation.
Earlier this year, Rep. Thompson and Rep. Greg Steube (FL-17) led a bipartisan group of 218 Members of Congress to successfully advance a discharge petition which forced House Speaker Mike Johnson to bring the Federal Disaster Tax Relief Act to the House floor for a vote. The historic advancement of Rep. Thompson and Rep. Steube’s petition marked only the third time a House discharge petition had succeeded in the 21st Century. H.R. 5863 passed the Senate earlier this month by unanimous consent.
The Federal Disaster Tax Relief Act excludes from taxpayer gross income, for income tax purposes, any amount received by an individual taxpayer as compensation for expenses or losses incurred due to a qualified wildfire disaster (a federally declared disaster declared after 2014 as a result of a forest or range fire). It also excludes relief payments for losses resulting from the East Palestine, Ohio, train derailment on February 3, 2023 and designates Hurricane Ian, among other federally declared disasters, as a qualified disaster for the purposes of determining the tax treatment of certain disaster-related personal casualty losses.