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President Biden approves federal tax relief for wildfire victims

President Biden approves federal tax relief for wildfire victims

The measure provides relief to tens of thousands of California fire victims who have had to shell out some of the meager settlement payments for homes, businesses and loved ones lost in wildfires sparked by Pacific Gas & Electric.

President Joe Biden on Thursday signed long-awaited legislation to exempt compensation for wildfire victims from federal taxes.

The measure provides relief to tens of thousands of California fire victims who have had to fork out portions of poor settlement payments for homes, businesses and loved ones lost in wildfires caused by Pacific Gas & Electric.

It also marks the end of a year of saga to achieve approval of the legislation. Reps. Mike Thompson, D-St. Helena, and Doug LaMalfa, R-Richvale, presented first introduced a version in 2022. The California Legislature eliminated state taxes on settlement payments that same year. the senate approved the winning version of the federal tax relief bill last week, sending it to the president’s desk.

“While the courts ultimately created a path to compensation, victims were unfairly taxed on their settlement money, money intended to help them rebuild their lives,” Thompson said in a statement. “In the time I’ve been working on this issue, I have yet to find a single person on both sides of the aisle who believes this is fair. “Today marks the day we finish correcting this mistake.”

The Federal Disaster Tax Relief Act, H.R. 5863, covers compensation for wildfire disasters declared federally after 2014 and excludes compensation for losses from wildfires and certain other disasters from future federal income taxes. It also exempts compensation for losses arising from the East Palestine, Ohio, train derailment in 2023. Attorney fees paid in a settlement are also tax-free.

“In Your Corner” columnist Marisa Endicott can be reached at 707-521-5470 or [email protected]. On X (formerly Twitter) @InYourCornerTPD and Facebook @InYourCornerTPD.