THOMPSON, LAMALFA INTRODUCE BIPARTISAN BILL EXTENDING FEDERAL DISASTER TAX RELIEF THROUGH 2032

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

The legislation builds on Thompson's landmark 2024 law, the Federal Disaster Tax Relief Act (Public Law 118-148), providing tax relief for individuals impacted by federally declared disasters. This new bill extends Public Law 118-148's protection for taxpayers 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.

"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."

"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."

"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 Rep. 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."

"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."

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

"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 Rep. 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.

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 in the House of Representatives to provide tax relief to PG&E fire victims in the 117th Congress and worked with Senator Padilla and Rep. LaMalfa to advance the legislation.

Last year, Rep. Thompson and Rep. Steube 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 of 2023 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 by unanimous consent and was signed into law by President Biden in December of 2024.

Today's legislation would build upon this landmark law. 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.