Tax Relief for Wildfire Victims: Compensation Excluded from Income
This act introduces changes allowing individuals affected by wildfires to receive compensation without it being subject to income tax. This means that funds intended to cover losses, such as living expenses, lost wages, or property damage, will go entirely to the victims, provided they are not already covered by insurance. These changes aim to facilitate recovery after a disaster.
Key points
Compensation for losses from qualified wildfire disasters will not be included in gross income for tax purposes.
This covers amounts received for additional living expenses, lost wages (excluding employer-paid wages), personal injury, death, or emotional distress.
No double benefits: deductions, credits, or basis increases will not be allowed for expenditures covered by the excluded payments.
The provisions apply to amounts received after December 31, 2025, for federally declared wildfire disasters after December 31, 2014.
Status:
Introduced
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