The Senate passed a federal disaster tax relief bill, the Doug LaMalfa Federal Disaster Tax Relief Certainty Act, by unanimous consent after it was held up by a single senator.
The House
Senate Finance Committee chairman Ron Wyden, R-Oregon, pressed for passage of the bill after convincing Sen. Ted Cruz, R-Texas, to drop an earlier procedural roadblock. Cruz reportedly wanted to add an amendment to include relief for victims of wildfires in Texas who wouldn't have qualified under the original bill.
"Common sense prevailed today and that's great news for Oregonians who shouldn't have to worry about getting slammed with a huge tax hit on top of losing their home to wildfire," Wyden said in a statement after the Senate voted to pass the bill by unanimous consent last Friday ahead of a five-week recess. "I'm heading home this weekend to meet with Oregonians facing these wildfire threats, and I can't wait to deliver this good news in person to them and the firefighters working around the clock to protect communities throughout our state."
The passage of the bill came last Friday amid the rapid spread of wildfires out west.
The legislation would end taxes on natural disaster settlement payments after Americans lose their homes through unpredictable natural disasters. The additional taxes were added under the Tax Cuts and Jobs Act of 2017. The Senate successfully suspended the tax in 2024, but it's up for renewal this year.
Since the bill has already passed the House on a bipartisan basis, it now heads to the White House for President Trump's signature.
Under current law, unreimbursed personal casualty losses arising in a qualified disaster area are deductible if such losses exceed $500 per casualty.
A "qualified disaster area" is an area with respect to which a major disaster has been declared during the period beginning in 2020 and ending 60 days after July 4, 2025, if the incident period begins on or after Dec. 28, 2019, and on or before July 4, 2025.
The bill would extend the federal tax deduction for qualified disaster-related personal casualty losses by defining a qualified disaster area as an area with respect to which a major disaster has been declared if the incident period begins on or after Dec. 28, 2019, and before Jan. 1, 2027.
The bill would provide that the exclusion from gross income of qualified wildfire relief payments applies to such payments attributable to forest or range fires declared a federal disaster after 2014 and before 2027, regardless of when such payments are received.
"What this is all about is when you lose your home in a wildfire, the last thing you ought to be worried about is being hit by a massive tax bill, the bipartisan disaster relief bill that we just passed would give Oregonians and Westerners affected by these blazes some real peace of mind," Wyden said during a floor statement. "It would lift a massive tax burden and deliver financial relief to each American impacted by a federally designated natural disaster."
