LaMalfa’s bill to exempt wildfire relief payments from federal income taxes included in bipartisan new tax deal

Today Congressman Doug LaMalfa announced that his bill with Congressman Mike Thompson  — H.R. 4970, the Protect Innocent Victims Of Taxation After Fire Act — has been included in the new tax framework package deal that was made by the House Committee on Ways and Means and the Senate Committee on Finance.

The bill included many bipartisan agreements including increases to Child Tax Credits, Research and Development Tax Credits, and trade agreements with Taiwan. LaMalfa’s bill exempts all wildfire relief payments from federal income taxes, and exempts taxation on legal fees, emotional distress, lost wages, and additional living expenses. The bill is fully paid for under this bipartisan agreement by repurposing funds previously authorized for COVID relief.

“I’m pleased and relieved to see my bill included in this bipartisan tax relief package,” LaMalfa said. “I have been working this iteration of the bill, along with Congressman Thompson, to see that it be included in any bipartisan agreement that is created. Our bill has broad, bipartisan support and was passed by a committee vote unanimously, 38-0. I cannot overstate the importance the passage of this bill will make to the many fire survivors in Nor Cal, across California and around the nation who are being unfairly taxed on their settlement award money that is meant to help them rebuild. There should be no barriers stopping passage of this new package as it is fully paid for, bipartisan, and includes House and Senate support. Now that a House and Senate deal is done, it ought to pass quickly.”

A summary of the entire tax bill can be found here.