House passes Federal Disaster Tax Relief Act to aid wildfire victims

May 22, 2024

Federal Disaster Tax Relief Act passed by House

On May 21, 2024, the House of Representatives passed the Federal Disaster Tax Relief Act (H.R. 5863), as reported by United States Congressman Mike Thompson.

This legislation includes a provision to exempt thousands of qualified wildfire victims in California from paying federal income tax on their settlement money and attorney fees.

This relief also applies retroactively to those affected.

Rep. Mike Thompson (CA-04) expressed his support for the bill: “Fire survivors have been through enough in the wake of losing their homes and livelihoods to wildfires—it’s wrong to tax them on the settlement money meant to help them rebuild their lives.”

He emphasized the importance of this bipartisan vote in aiding recovery efforts for those who have lost homes, businesses, and loved ones.

Thompson’s role in advancing the legislation

Rep. Thompson, serving as the Ranking Member of the Subcommittee on Tax for the Ways and Means Committee, has been instrumental in advancing this legislation.

He first introduced the bill to provide tax relief to PG&E fire victims in the 117th Congress and has continued to advocate for it since.

Last week, Rep. Thompson, along with Rep. Greg Steube (FL-17), led a bipartisan group of 218 Members of Congress in successfully advancing a discharge petition.

This petition compelled House Speaker Mike Johnson to bring the Federal Disaster Tax Relief Act to the House floor, marking the third successful House discharge petition in the 21st Century.

Provisions of the Federal Disaster Tax Relief Act

The Federal Disaster Tax Relief Act includes key provisions aimed at providing financial relief to disaster victims.

It excludes from taxpayer gross income any amount received as compensation for expenses or losses due to a qualified wildfire disaster, applicable to disasters declared after 2014.

The bill also extends relief to victims of other disasters, such as the East Palestine, Ohio, train derailment on February 3, 2023, and designates Hurricane Ian as a qualified disaster for tax purposes.

This legislation is now headed to the Senate for a vote before it can be signed into law by President Biden.

Next steps for the bill

With the House’s approval, the Federal Disaster Tax Relief Act faces its next challenge in the Senate.

Advocates hope for a swift passage to provide immediate relief to those affected by various disasters.

The bill’s successful enactment would mark a significant step in supporting recovery efforts and ensuring that victims are not further burdened by tax obligations on their settlement funds.

Rep. Thompson called for Senate Republicans to collaborate: “Today’s bipartisan vote to provide tax relief to fire survivors is an important step towards recovery for those who lost homes, businesses, and loved ones and sends a clear message to Senate Republicans: It’s time to work with us to pass much-needed relief for disaster victims.”

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