Yuba-Sutter Times

The House of Representatives has passed H.R. 5863, The Federal Disaster Tax Relief Act, which includes a provision to exempt wildfire relief payments from federal income taxes. This specific measure is part of Congressman Doug LaMalfa’s (R-Richvale) bill, H.R. 4970, the Protect Innocent Victims Of Taxation After Fire Act. In addition to wildfire relief payments, H.R. 5863 exempts relief payments for losses resulting from the 2023 East Palestine, Ohio train derailment and declares certain hurricanes as qualified for disaster-related tax treatments.

The legislation also incorporates Rep. LaMalfa and Rep. Thompson’s (D-CA) co-written Taxpayer Certainty and Disaster Tax Relief Act. This act simplifies the process of writing off losses from other natural disasters and includes provisions to exempt taxation on legal fees, emotional distress, lost wages, and additional living expenses related to wildfire losses.

Once enacted into law, any taxes already paid on wildfire settlement money since 2020 will be eligible for a retroactive refund by filing an amended return or claiming the change during the next tax year. The bill passed with a vote of 382-7.

In January 2024, both the Federal Disaster Tax Relief Act and the Protect Innocent Victims Of Taxation After Fire Act were included in a broader bipartisan tax deal that expands the Child Tax Credit, increases low-income housing supply by enhancing the Low-Income Housing Tax Credit, reduces bureaucratic paperwork for small businesses while expanding their expensing cap, and improves trade agreements with Taiwan to bolster competitiveness with China. Despite passing out of the House by a wide margin of 357-70, the Senate has yet to take up this package due to non-disaster tax relief provisions.

To expedite relief for disaster survivors, a bipartisan group of 218 Members of Congress advanced a discharge petition requiring House Speaker Mike Johnson to bring H.R. 5863 to the House floor for a vote.

“A vast group of bipartisan lawmakers want to see this legislation accomplished. Fire victims have been patient and waited more than long enough. The award money should not be an IRS taxable event. The House has now passed this initiative twice, and I will continue to move it forward until President Biden signs it into law,” said Congressman LaMalfa.

Congressman Doug LaMalfa is a lifelong farmer representing California’s First Congressional District, including Butte, Colusa, Glenn, Lassen, Modoc, Shasta, Siskiyou, Sutter, Tehama and Yuba Counties.

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