House Passes Bill to Shield Eaton Fire Settlements From Federal Taxes

Pasadena Now reports that the U.S. House passed H.R. 5366, the Doug LaMalfa Federal Disaster Tax Relief Certainty Act, which would prevent Eaton Fire survivors from owing federal income tax on qualified wildfire settlement payments, including potential payments from Southern California Edison. The bill would extend the federal tax exclusion for qualified wildfire relief payments for fires occurring between December 31, 2014 and January 1, 2027, with covered payments received through 2030. The article notes that the issue is urgent for Eaton Fire survivors because the prior wildfire settlement tax exemption expired on December 31, 2025. Without new legislation, settlement payments could be taxed as ordinary income, reducing the funds survivors need for rebuilding and potentially affecting eligibility for some government benefits. The bill now moves to the U.S. Senate, where companion legislation is being led by Senators Rick Scott and Adam Schiff and has been referred to the Senate Finance Committee. Rep. Judy Chu called the House vote a major victory for disaster survivors, while also urging federal action on California’s broader disaster supplemental funding request.
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