On Wednesday December 4th, the U.S. Senate passed, by unanimous consent, the Federal Disaster Tax Relief Act (H.R. 5863), which will provide tax relief for individuals impacted by natural disasters. In May, the bill was brought to the floor of the House after 218 representatives signed on to a discharge petition, led by Representative Mike Thompson (D-Lake County). At that time, the House passed the measure by a vote of 382-7. Now that the measure has been passed by the Senate, it will head to President Biden’s desk for signature.
The Act provides tax relief for those affected by hurricanes, wildfires, and other qualified disasters, and will apply retroactively to qualified victims. These deductions can be claimed along with the standard deduction, instead of requiring itemization.
The bipartisan legislation 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). It also exempts 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.
RCRC has been heavily engaged in advocacy on this measure to benefit residents of impacted member counties. For more information, contact RCRC Senior Policy Advocate, Staci Heaton.