December 10, 2025

Wyden, Colleagues Introduce Bipartisan Bill to Extend Tax Relief for Wildfire Victims

Washington, D.C. – U.S. Senator Ron Wyden said today he has joined Senate colleagues to introduce legislation that would permanently ensure wildfire survivors in Oregon and nationwide are not taxed on compensation they receive for losses and damages suffered during a wildfire.

“The last thing Oregonians need when they’re rebuilding after a wildfire is to get clobbered by a big tax bill on their financial settlements,” Wyden said. “This bill will make it possible for wildfire survivors to use every settlement dollar they receive to repair their homes and businesses. It’s also a smart way to pump more resources back into devastated communities that need all the help they can get. My colleagues and I are going to fight to get this passed as soon as possible, because making this tax relief permanent is a no-brainer.”

The Protect Innocent Victims of Taxation After Fire Extension Act would extend and make permanent the protections signed into law last year within the Federal Disaster Tax Relief Act, which excluded wildfire-related settlement payments from federal income tax calculations. This includes payments that cover living expenses, lost wages, or compensation for injury, death, or emotional distress.

However, this exclusion is set to expire at the end of 2025. Failure to extend this provision means any wildfire-related settlement payments beginning in 2026 will again be subject to federal income tax obligations. More and more states have qualifying settlements or active litigation related to wildfires. This bill would allow wildfire survivors to put the full amount of their settlement money toward recovering from devastating losses.

Additionally, the bill would allow victims to claim the exemption in the year they receive payments rather than to amend prior tax returns for a refund.

The bill was led by U.S. Senator Alex Padilla, D-Calif. In addition to Wyden, the bipartisan bill was also cosponsored by U.S. Senators Cynthia Lummis, R-Wyo., and Tim Sheehy, R-Mont. The bill was led in the House by U.S. Representatives Mike Thompson, D-Calif., and Doug LaMalfa, R-Calif.

The full text of the bill is here.