On December 5, Senators Alex Padilla (D-CA), Cynthia Lummis (R-WY), Ron Wyden (D-OR), and Tim Sheehy (R-MT) introduced the Protect Innocent Victims of Taxation After Fire Extension Act, to permanently ensure wildfire survivors are not taxed on compensation they receive for losses and damages suffered during a fire.
This bipartisan legislation would extend and make permanent Padilla and Lummis’ bill signed into law last year, which is set to expire at the end of the 2025 calendar year. Failure to extend this provision would mean that, beginning in 2026, any wildfire-related settlement payments will again be subject to federal income tax obligations.
A one-pager on the measure is available here. Representatives Doug LaMalfa (R-CA-01) and Mike Thompson (D-CA-04) are leading similar legislation in the House (H.R. 5225), introduced in September 2025.
For additional information, contact RCRC Senior Policy Advocate, Staci Heaton.