Protect Innocent Victims of Taxation After Fire Extension Act

This bill makes wildfire relief payments tax-free for people hurt by major wildfires. If you get money to cover things like extra living costs, lost wages from being displaced, injuries, a death in the family, or emotional distress due to a federally declared wildfire disaster, you would not have to count that money as income on your taxes, as long as insurance didn’t already cover it. This applies to wildfires that were declared federal disasters after December 31, 2014, and ends for payments received after December 31, 2032. You also can’t “double dip” by taking a tax write-off or raising the value of property for the same costs that this tax break already covers.

Key points

• Who is affected: Individuals receiving wildfire relief tied to federally declared wildfire disasters (after 12/31/2014).
• What changes: These relief payments don’t count as taxable income if they cover losses not paid by insurance. Employer-paid replacement wages don’t qualify for this tax-free treatment. No extra tax deductions or property value increases are allowed on the same amounts.
• When: Applies now, but the tax-free treatment ends for payments received after 12/31/2032.