After nearly seven months of partisan hold-up, the U.S. Senate unanimously passed H.R. 5863, the Federal Disaster Tax Relief Act of 2023.
The bipartisan legislation went to President Joe Biden Dec. 11 for his signature, which would make it law.
HR 5863 will exempt qualified victims of the 2021 Dixie Fire from having to pay federal income tax on their settlement money, or pay tax on attorney fees included in the settlement. This relief will also apply retroactively to qualified victims, said Plumas County Supervisor Kevin Goss.
“I’m super excited to get this legislation across the finish line. We’ve been at it for over two years,” he told The Plumas Sun.
Goss, who has been lobbying for tax relief legislation, is holding his celebration pending Biden’s signature. The president has 10 days to sign the legislation.
Other disaster areas included
HR 5863 exempts thousands of disaster victims throughout the country from having to pay federal income tax on their settlement money. Introduced by California Rep. Mike Thompson, it includes victims of Hurricanes Ian, Milton, Helene, Idalia, Debby, Nicole, and Fiona; the Maui Fires; recent California wildfires in addition to Dixie; and the East Palestine Train Derailment.
“Fire survivors have been through enough in the wake of losing their homes and livelihoods to wildfires—it’s wrong to tax them on the settlement money meant to help them rebuild their lives.”
Rep. Mike Thompson, California’s 4th congressional district
“Fire survivors have been through enough in the wake of losing their homes and livelihoods to wildfires—it’s wrong to tax them on the settlement money meant to help them rebuild their lives,” said Thompson. He called the Senate’s unanimous vote to pass tax relief for fire survivors “an important step towards recovery.”
The bill was co-sponsored by Rep. Gregory Steube, who represents the Sarasota area of Florida. It was supported by California Rep. Doug LaMalfa and a total of 19 Republicans and 16 Democrats.
In passing the legislation Goss credited Jennifer Gray Thompson (not related to Rep. Thompson), executive director of After the Fire USA, a nonprofit organization that supports communities as they recover from fire and rebuild their lives. She has been lobbying for HR 5863 for over 39 months, ever since Rep. Thompson introduced it in various versions. The bill has had its ups and downs in the bipartisan effort to secure relief from taxes for Dixie and other fire survivors.
Jennifer Thompson told The Plumas Sun she has no worries about Biden’s signature: “None! Zero!”
Additional steps to tax relief
Early in 2025 Goss plans to join California officials working to pass state legislation that would exempt Dixie Fire victims from state taxes. SB 1004 was unanimously approved on the state Senate floor May 24, sponsored by Sen. Scott Wilk of Santa Clarita. The bill then moved to the California Assembly, where it was approved.
California Governor Gavin Newsom vetoed the legislation Sept. 29, citing the state’s mounting budget deficit and the impact of any loss of tax revenue. Goss promised to continue working to approve relief from California taxes for Dixie Fire victims.
“Our goal is approval by April 15, 2025,” he said.
Approval of federal tax relief comes after many Dixie Fire victims have already paid federal taxes. To get the relief provided by the federal legislation, victims must go to their individual accounts to file tax amendments, Goss said.
