On Tuesday May 21, the House voted 382-7 in favor of the Federal Disaster Tax Relief Act of 2023 (H.R. 5863). The bill's vote occurred only after a House majority led by Representative Mike Thompson (D-Lake County) signed a discharge petition seeking action on the bill, triggering a need to act by House Speaker Mike Johnson (R-LA). The bill now goes to the Senate for a vote before going to President Biden’s desk for his signature.
The Federal Disaster Tax Relief Act excludes from taxpayer gross income, for income tax purposes, any amount received by an individual taxpayer as compensation for expenses or losses incurred due to a qualified wildfire disaster (a disaster declared after 2014 as a result of a forest or range fire).
The bill includes Representative Thompson's legislation that would exempt thousands of qualified wildfire victims in California, including Pacific Gas and Electric fire victims, from having to pay federal income tax on their settlement money or pay tax on attorney fees that are included in the settlement. This relief would also apply retroactively to qualified victims.
“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,” said Representative Thompson on Tuesday. “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.”