WASHINGTON, D.C. — Today, U.S. Senators Alex Padilla (D-Calif.), Bill Cassidy (R-La.), Jon Tester (D-Mont.), and Cynthia Lummis (R-Wyo.) introduced the Protect Innocent Victims Of Taxation After Fire Act to provide tax relief for wildfire survivors who have received compensation for losses and damages suffered during a wildfire. Representatives Doug LaMalfa (R-Calif.-01) and Mike Thompson (D-Calif.-04) are leading companion legislation in the House of Representatives.

The bill ensures that payments made from the Pacific Gas and Electric Company (PG&E) Fire Victim Trust will not be taxed. The Trust, established in 2020, is a multibillion-dollar wildfire settlement for the nearly 70,000 victims of the three major fires in 2015, 2017, and 2018 found to be caused by PG&E equipment. Currently, the taxability of funds received from the Trust varies based on what type of loss is being claimed, making it difficult for recipients to determine what amount of their claims can be used to rebuild their lives or replace their losses. Unfortunately, with utility-caused fires on the rise, more and more states have qualifying settlements or active litigation. This bill will provide future wildfire survivors with the certainty that their settlement money will not be taxed.

“Wildfire victims should not be taxed on payments that don’t cover their full losses and damages to begin with, but over 70,000 Californians impacted by the Butte, North Bay, and Camp wildfires currently face uncertainty over whether this assistance is taxable,” said Senator Padilla. “These payments are not income, and our bipartisan bill will ensure families that have suffered devastating loss receive full and proper compensation to help rebuild their lives.”

“The country comes together to help Louisiana when we’re in need after hurricanes and Louisianans are happy to do the same for others after similar disasters,” said Dr. Cassidy. “This tax provision is a way for Americans to help fellow Americans who are trying to help themselves.”

“When wildfires hit, families pay a price far greater than any dollar amount – so it’s critical that we provide relief to those hit hardest,” said Senator Tester. “As fire seasons become longer and more extreme, we know that wildfires are becoming even more common in the Treasure State each year, which is why we need to ensure that those affected receive the relief they deserve. I’ll always fight to lower costs for Montanans, and look forward to getting this bipartisan bill across the finish line.”

“When a family loses everything in a wildfire, the last thing they should be worried about is setting aside money from insurance to pay taxes,” said Senator Lummis. “The Clark Wildfire in Wyoming was a tragic reminder of the indiscriminate destruction wildfires cause and showed just how difficult and costly it can be to rebuild what you have lost. The Protect Innocent Victims of Taxation After Fire Act ensures that every last dollar from wildfire insurance will go to helping families rebuild their lives instead of padding tax coffers in Washington.”

Last Congress, Padilla joined the late Senator Dianne Feinstein in introducing a version of this legislation designed to cover the Fire Victim Trust claimants. This bill expands protections to anyone receiving wildfire-related disaster aid payments, including compensation for losses, expenses, or damages, such as compensation for additional living expenses, lost wages, personal injury, death, or emotional distress.

A one-pager of the bill is available here.

Full text of the bill is available here.

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