California representatives are pushing for critical financial relief for wildfire survivors, introducing a groundbreaking bill that could provide significant tax exemptions for those impacted by devastating fires.

The bipartisan Protect Innocent Victims of Taxation After Fire Extension Act, introduced by Rep. Doug LaMalfa (R-Richvale) and co-authored by Rep. Mike Thompson (D-St. Helena), aims to extend tax relief for disaster victims through 2032. Currently, survivors of federal disasters between 2020 and 2025 could be exempt from paying taxes on critical recovery payments.

Under the proposed legislation, survivors would not be taxed on payments covering essential needs like living expenses, lost wages, and compensation for injury, death, or emotional distress. Importantly, the bill would also streamline the tax exemption process, allowing victims to claim the exemption in the same year they receive payments, instead of the current complicated method of amending prior tax returns and waiting for IRS refunds.

Rep. Thompson emphasized the importance of the bill, stating, “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”.

This proposed legislation comes at a critical time when many California communities continue to grapple with the long-term impacts of increasingly frequent and destructive wildfires. By reducing financial barriers for survivors, the bill could provide much-needed breathing room for those attempting to recover from catastrophic losses.

The bill represents a rare moment of bipartisan cooperation, with representatives from different political parties joining forces to support wildfire survivors. As the legislation moves through Congress, it offers hope for thousands of Californians who have experienced the traumatic aftermath of wildfire disasters.