Sponsors (8)
The bill provides near-term, tax-free relief to uninsured wildfire victims and simplifies recovery-related tax reporting through 2032, but it limits other tax benefits, may increase future taxable gains on property, and offers only a temporary solution.
Homeowners and individuals with uninsured wildfire losses will receive tax-free compensation for those losses for payments received in 2026–2032, reducing their out-of-pocket recovery costs.
Taxpayers who receive these excluded payments will not have to count them as taxable income, simplifying tax filing and helping avoid higher tax liabilities after disaster recovery.
Recipients cannot also claim deductions or tax credits for expenditures that were covered by the excluded payments, which may reduce other tax benefits—especially for low-income taxpayers.
Excluded amounts cannot be used to increase property basis, which could raise future taxable gains when the property is sold.
The exclusion is temporary (applies only to amounts received 2026–2032), creating uncertainty and leaving future wildfire victims without the same tax relief after 2032.
Based on analysis of 2 sections of legislative text.
Excludes certain wildfire relief payments received by individuals from gross income for amounts received 2026–2032, while denying deductions/credits or basis increases for those same amounts.
Official title: To amend the Internal Revenue Code of 1986 to exclude qualified wildfire relief payments from gross income, and for other purposes.
Introduced March 5, 2026 by Vince Fong · Last progress March 5, 2026
Creates a temporary tax exclusion for certain wildfire relief payments so individuals do not have to include specified disaster-related payments in gross income. The exclusion covers compensation for losses, additional living expenses, lost wages (with a limited exception), medical and emotional damages tied to federally declared forest or range fire disasters and applies to amounts received after December 31, 2025 through December 31, 2032. The bill also prevents taxpayers from taking other tax benefits for the same excluded amounts (no double tax benefit): it disallows related deductions or credits and bars increases in tax basis to the extent of the exclusion. It adds a new Internal Revenue Code section and a table-of-sections entry to implement the change.