Congress Approves Tax Relief for Wildfire Survivors: A Win for Oregon!
After years of hardship and uncertainty, wildfire survivors across the West can finally breathe a sigh of relief. No longer will they be burdened with federal income taxes on their hard-won recovery settlements and legal fees!
The Federal Disaster Tax Relief Act of 2023 has just passed the Senate, following its nearly unanimous approval by the U.S. House of Representatives a few months ago. After being caught in a political tug-of-war, this crucial legislation is finally on the verge of becoming law, with President Joe Biden poised to sign it.
This groundbreaking bill offers a lifeline to those who have endured wildfires from 2016 to 2026, exempting them from federal income taxes on disaster recovery payments and attorney fees received during this period. It’s a much-needed relief for those who have faced unimaginable loss.
But that’s not all—victims of other disasters will also feel the impact. The legislation extends its reach to survivors of the 2023 East Palestine train derailment in Ohio, ensuring they, too, don’t shoulder the tax burden on payments from Norfolk Southern.
Moreover, if you’ve experienced any natural disaster since 2020, this act includes provisions for a casualty loss deduction. If you’ve only received partial insurance payments for home damages, you can deduct those uncovered losses on your federal tax return without the hassle of itemization.
The journey to pass this vital bill began last year, led by Florida Republican Rep. W. Gregory Steube. It gained momentum after a heartfelt public campaign by a political action committee, American Disaster Survivors, which took to billboards in Idaho and Oregon. Their goal? To capture the attention of the key leaders of the U.S. Senate Finance Committee, where the bill had been stalled. Oregon’s senior senator, Democrat Ron Wyden, chairs the committee, and Idaho’s Republican Sen. Mike Crapo is its ranking member. This PAC was founded by courageous survivors of devastating fires that ravaged California in 2017 and 2018, still grappling with the aftermath.
This legislation is designed to sunset in 2026, as a new round of federal tax negotiations is set to take place in 2025. However, Wyden emphasized that the need for immediate relief is critical and long overdue.
“People have lost their homes, businesses, and livelihoods. Finally, the federal government is stepping up to provide some common sense!” he declared.
Supported by bipartisan efforts from California’s lawmakers, Wyden acknowledged the challenges they faced getting this bill through a Republican-controlled House. Yet he stood firm, proud that Westerners impacted by these catastrophic fires can rest easier tonight, knowing they won’t bear the extra weight of taxes on their recovery.
Spokespersons from the American Disaster Relief PAC expressed gratitude for this monumental step. “This is a beacon of hope for millions of Americans across California, Oregon, Hawaii, Washington, and Idaho who have faced such profound loss,” they said.
Echoing this sentiment, the federal measure closely mirrors a bill that gained unanimous support in the Oregon Legislature earlier this year, eliminating state income tax on settlements and lawyer fees for wildfire victims. Senate Bill 1520 was championed by survivors of the 2020 Labor Day Fires, including Sam Drevo, who saw his hometown of Gates nearly destroyed.
“On behalf of fire survivors everywhere, I cannot express how grateful I am for this legislation. While I’m concerned about the sunset provision, this is undeniably a huge step forward for fire survivors,” Drevo noted.
He and his mother are still navigating the complexities of their tax situation following her settlement meant to help rebuild the home wiped out by the fires. “This relief will make a difference—it’s a monumental step in a time when so many have lost everything,” he emphasized.
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