When someone loses property to a fire, flood, or other catastrophe and receives a settlement as compensation, from a utility or other private entity, federal and state laws consider that taxable income. This is an unjust burden on Californians trying to rebuild their homes and lives after disasters.
Last year, Senator Dahle introduced similar legislation excluding income taxes for individuals who received settlements from Pacific Gas & Electric in connection with the Zogg Fire. The bill passed unanimously through both houses, displaying legislators’ broad support for excluding these settlements from being taxed. Recent bills have also exempted settlements from the Camp Fire and other disasters.
“This bill will help those who have been through a very challenging and difficult time to put every dollar towards rebuilding their lives and living the California Dream. The last thing we should be doing is taxing individuals on those payments”said Dahle
SB 927 would end the recent cumbersome practice of waiving taxes one disaster at a time, and instead create a clear statewide policy that supports traumatized victims.