Friday, 7 August 2026, 23:01
The Senate has cleared a major hurdle for wildfire survivors. A bipartisan bill that would shield disaster compensation from federal income taxes passed unanimously on August 7 and now heads to President Trump's desk.
The Doug LaMalfa Federal Disaster Tax Relief Certainty Act extends tax relief to any federally declared wildfire before January 1, 2027. That includes the 2025 Los Angeles wildfires. Under the bill, survivors would not pay federal income tax on settlement payments that cover living expenses, lost wages, or compensation for injury, death or emotional distress.
The legislation builds on a 2024 law that first removed this tax burden but expired at the end of last year. A key change lets victims claim the exemption in the year they receive payments rather than file amended tax returns for a refund.
Senators Alex Padilla, Cynthia Lummis, Ron Wyden and Tim Sheehy led the effort in the Senate. Representatives Mike Thompson and the late Doug LaMalfa championed companion legislation in the House.
Padilla, a California Democrat, framed the bill as basic fairness. “After a fire takes your home, the last thing families and communities should have to think about is a tax bill on the very settlement meant to help them rebuild,” he said.
Wyden, an Oregon Democrat, connected the issue to recent utility-caused wildfires in California, Oregon and Hawaii. “The last thing you should have to worry about if your house burns down in a wildfire or washes away in a flood is being hit with a massive tax bill,” he said.
Lummis, a Wyoming Republican, honored the bill's namesake. “Doug LaMalfa was a tireless champion for western priorities, a valued colleague, and a dear friend,” she said. “Watching this bipartisan legislation that he fought so hard for, and that now bears his name, signed into law is a fitting way to honor his legacy.”
For California, the bill arrives as communities are still recovering from destructive fire seasons. Survivors of the 2025 Los Angeles wildfires would be covered, and the exemption would also apply to future federally declared wildfires before January 1, 2027. That gives residents in high-risk areas a clearer financial safety net after a disaster.
The measure is especially important in Northern California, where utility-caused wildfires have forced thousands to seek compensation. Lawmakers said the goal is to make sure rebuilding money is used for rebuilding, not sent to the IRS.
The bill is named after the late Representative Doug LaMalfa, a California Republican known for championing western priorities in the House. It updates a 2024 law that introduced the same tax protection but expired at the end of last year. The new version closes that gap and simplifies the process for survivors.
If signed into law, the measure would give wildfire survivors certainty that their settlement money stays in their pockets. For California, it could be a critical protection as fire seasons grow longer and more destructive. The bill now awaits the president's decision.
