Tax Relief Coming for Wildfire Victims

Wildfire survivors across the United States received some long-awaited good news this week when the House of Representatives passed the Tax Relief for American Families and Workers Act of 2024. Among the bipartisan package of tax-related bills was the Protect Innocent Victims of Taxation After Fire (PIVOT Fire) Act, authored by Congressman Doug LaMalfa (R-CA) and Congressman Mike Thompson (D-CA).

The PIVOT Fire Act will make any financial relief payments provided to wildfire victims tax-exempt. This includes exemptions from federal income tax on settlement funds, legal fees, emotional distress claims, lost wage reimbursements, and other living expense assistance programs. In addition, any taxes already paid on these funds since 2020 will now be eligible for retroactive refunds.

Congressman Doug LaMalfa (R-CA) celebrated the 357-70 House vote to pass the Act. He acknowledged wildfire survivors have waited years for clarity on the taxation of their settlement payments, which can represent critical funds for rebuilding lives. By exempting these payments from income tax, victims will retain more money to recover.

The tax package also expands the Child Tax Credit, assists small businesses through accelerated depreciation rules, incentivizes domestic R&D, and offers tax relief for other federally declared disasters. Importantly, these proposals will reportedly add 600,000 American jobs.

The Senate received the bill this week. Congressman LaMalfa stated, “his hope be they will act quickly to send the legislation for the President’s signature.” This would enshrine financial protections for wildfire victims into law and provide them additional assistance during tax season.

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