LaMalfa Introduces the Bipartisan Protect Innocent Victims of Taxation After Fire Extension Act

Washington, D.C.-Today, Congressman Doug LaMalfa (R-Richvale) introduced H.R. 5225, the Protect Innocent Victims of Taxation After Fire Extension Act. Joining him on this legislation are Reps. Thompson (D-CA), McClintock (R-CA), Sherman (D-CA), Bentz (R-OR), and Bynum (D-OR).

The legislation builds on the law passed in December 2024 as part of the Federal Disaster Tax Relief Act (Public Law 118-148), which ensures wildfire survivors aren't taxed on payments meant to cover their certain disaster losses or costs, including living expenses, lost wages, or compensation for injury, death, or emotional distress, if the fire was declared a federal disaster between 2020 and 2025.

This new bill extends that same protection through 2032 and allows victims to claim the exemption in the year they receive payments, instead of having to amend prior tax returns and wait for IRS refunds.

"People who lose everything in a wildfire should not have to face the added burden of being taxed on payments that are supposed to help them recover," said Rep. LaMalfa. "This bill gives wildfire victims certainty and fairness in the tax code while making sure they can focus on rebuilding their lives instead of fighting with the IRS to change past tax returns to receive refunds."

"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. Survivors can't afford to wait around for Congress to provide them retroactive relief," said Rep. Thompson. "I am proud to work with my colleagues to ensure future settlements to survivors remain tax exempt through 2032, so Americans struck by disaster can focus on rebuilding their lives."

"Californians are constantly under threat of wildfire," said Rep. McClintock. "This bill reauthorizes commonsense protections and ensures victims are supported when tragedy strikes."

"The Palisades Fire in my district caused immense devastation, displaced many families and destroyed entire communities, and the last thing fire victims should face is a tax bill on their recovery assistance," said Congressman Brad Sherman. "This legislation ensures that fire victims in my district and around the country are not unfairly taxed as they focus on rebuilding their lives and livelihoods."

"The horrific wildfires in the West have cost families their property, homes, and in some cases their jobs. Until late last year, the United States Tax Code added insult to injury by taxing settlement funds meant for recovery," said Congressman Bentz. "People who lose their homes and wages due to wildfire should not be taxed on the funds they received as result of these disasters. By extending such protections through 2032, we are helping victims get at least a little closer to recovery from their losses.

"When families are trying to pick up the pieces after a wildfire, they don't need Uncle Sam taking a cut of their relief," said Rep. Bynum. "This bipartisan bill ensures that wildfire survivors won't be taxed on the very funds that are meant to help them rebuild their lives and homes. I'll continue working with anyone - Democrat, Republican, or Independent - to prevent wildfires and support victims in the aftermath."

The extension represents a bipartisan commitment to ensuring wildfire survivors receive the help they need without facing additional financial stress. By extending this tax relief, Congress is giving families and individuals the certainty they deserve while they work to recover and rebuild after devastating fires.

Congressman Doug LaMalfa is Chairman of the Congressional Western Caucus and 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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