Protect Innocent Victims of Taxation After Fire Extension Act
Summary
SB 3372 would amend the Internal Revenue Code to exclude from gross income certain qualified wildfire relief payments received by individuals. The bill defines these payments broadly to cover compensation for losses, expenses, or damages caused by a qualified wildfire disaster, including additional living expenses, lost wages in limited circumstances, personal injury, death, and emotional distress, so long as those losses are not otherwise covered by insurance or another source.
The bill applies only to payments received after December 31, 2025, and it would add a new section 139M to the tax code. It also includes anti-double-benefit rules: taxpayers could not claim a deduction or credit for expenses already excluded under the provision, and no basis increase would result from excluded amounts. The stated purpose is to provide tax relief to wildfire victims by ensuring disaster compensation is not taxed.
Impact
If enacted, the bill would change federal tax law by creating a new exclusion from gross income for qualifying wildfire relief payments under the Internal Revenue Code. This would affect individuals who receive disaster-related compensation after federally declared wildfire disasters, as well as insurers, relief organizations, employers, and other payers involved in wildfire recovery payments. It would also limit related tax benefits to prevent duplicate tax advantages for the same losses or expenditures.
Sentiment
The available context suggests broad bipartisan and supportive sentiment. The bill was introduced by Senator Padilla with cosponsors from both parties, including Senators Lummis, Wyden, and Sheehy, which indicates cross-party interest in providing tax relief to wildfire victims. No votes or committee debate are provided, but the title and structure of the measure reflect a generally sympathetic approach toward disaster survivors.
Contention
The main policy issue is the scope of the tax exclusion and how broadly wildfire-related compensation should be treated. The bill includes compensation for a wide range of harms, but only to the extent the losses are not already covered by insurance or otherwise, which helps avoid overcompensation and may limit disputes over eligibility. Another likely point of attention is the effective date and whether the exclusion should apply only prospectively to payments received after December 31, 2025, rather than to earlier wildfire relief payments. No explicit opposition is shown in the provided record.