Press Release
Posted:
Washington – Today, Rep. Mike Thompson (D-CA-04) and Senator Alex Padilla (D-CA) announced the Senate’s unanimous vote to pass the bipartisan Federal Disaster Tax Relief Act (H.R. 5863). The bill includes Rep. Thompson’s legislation that will exempt 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 will also apply retroactively to qualified victims.
“Fire survivors have been through enough in the wake of losing their homes and livelihoods to wildfires—it’s wrong to tax them on the settlement money meant to help them rebuild their lives,” said Rep. Thompson. “The Senate’s unanimous vote to pass tax relief for fire survivors is an important step towards recovery for victims in my district and across California. Today’s overwhelming and bipartisan vote to deliver relief to victims was made possible by Senator Padilla and I thank him for his dedication and partnership in getting this passed.”
“Disaster settlement funds are not income, they’re compensation for what wildfire survivors have lost,” said Senator Padilla. “When a wildfire survivor is combing through the ashes of their former home, the last thing they should have to worry about is how they’re going to pay taxes on any settlement they receive. Our bipartisan, bicameral bill will ensure the tens of thousands of Californians impacted by the Butte, North Bay, and Camp wildfires receive full and proper compensation to rebuild their lives after heartbreaking disaster.”
H.R. 5863 passed the Senate today by unanimous consent. The bill will now go to President Biden’s desk to be signed into law.
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.
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 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.