Bynum, Bentz join bipartisan group on bill to keep exempting wildfire relief payments from federal income taxes
Barney Lerten
WASHINGTON (KTVZ) — A bipartisan group of House members – including Oregon Democrat Janelle Bynum and Republican Cliff Bentz – introduced legislation Friday to continue exempting wildfire relief payments from the federal income tax for six more years.
The Doug LaMalfa Protect Innocent Victims of Taxation After Fire Extension Act seeks to ensure that disaster aid remains with survivors as they rebuild their communities.
The bill makes a targeted extension to the Federal Disaster Tax Relief Act of 2023. It would continu to exclude wildfire recovery payments—including compensation for living expenses, lost wages, personal injury, death and emotional distress—from federal gross income filings through 2032.
Without an extension, payments received by victims of catastrophic wildfires would once again be subject to federal tax obligations.
Bynum, one of the bill’s primary sponsors, emphasized that the federal government should not collect a portion of relief funds intended for reconstruction.
“When wildfire survivors are trying to rebuild after a massive tragedy, the federal government shouldn’t be taking a cut of their relief,” Bynum said. “This bipartisan bill ensures that survivors aren’t taxed on the money meant to help them pick up the pieces.”
Bentz noted that until late last year, the United States Tax Code “added insult to injury” by taxing these settlement funds.
“People who lose their homes and wages due to wildfire should not be taxed on the funds they received as result of these disasters,” Bentz said.
California lawmakers highlighted the specific impact of recent disasters on their districts. Rep. Brad Sherman noted that the Palisades Fire caused immense devastation and destroyed entire communities.
“The last thing fire victims should face is a tax bill on their recovery assistance,” Sherman said. He added that the legislation ensures victims are not “unfairly taxed as they focus on rebuilding their lives and livelihoods.”
Rep. Mike Thompson of California, who worked with the late Rep. LaMalfa on previous tax relief efforts, stated that survivors cannot afford to wait for retroactive relief from Congress. Thompson said it is wrong to tax settlement money meant for rebuilding after families have lost homes and livelihoods.
Rep. Tom McClintock of California added that the bill reauthorizes “commonsense protections” for residents who are constantly under the threat of wildfires.
Rep. Jill Tokuda of Hawaii compared the recovery needs in Lahaina to those seen in Paradise, Calif. Tokuda said recovery can be “undone” if families lose access to essential resources through taxation.
“Survivors shouldn’t face a tax bill while they’re still rebuilding their lives,” Tokuda said. “By removing federal taxes from wildfire settlements, we can prevent the disaster after the disaster.”
Rep. Blake Moore of Utah, who joined in reintroducing the measure, described LaMalfa as a “champion for rural Americans.” Moore stated that after catastrophic fires, victims should not have to worry about whether disaster aid will be subject to federal taxes. The bill is sponsored by a bipartisan group including Reps. Vince Fong, McClintock, Sherman, Thompson, Moore, Bentz and Tokuda.