The California Legislature has approved a bill that waives state income taxes for wildfire survivors who received settlements from entities found responsible for starting wildfires, mainly electric utilities. The measure applies to settlement payments made between January 1, 2021, and January 1, 2030. It covers any fire declared a state or federal disaster, including the Dixie Fire, Mill Fire, and Slater Fire, which have affected communities in the 1st Senate District.
Senator Megan Dahle, R-Bieber, commented on the legislative process: “This has been a long and complex effort in the Legislature, including the veto of a similar bill last year,” said Sen. Megan Dahle. “But I have been committed to making sure that California doesn’t balance its budget on the backs of wildfire victims, and that money paid out as compensation for losses goes toward helping families rebuild. I’m grateful to Assemblywoman Heather Hadwick, Assemblyman Tom Lackey, and the administration for their work on this critical tax relief that will help communities move forward.”
Earlier provisions included in the June state budget limited tax relief to settlements from class-action lawsuits only. The newly passed Senate Bill 159 expands eligibility to all settlements related to qualifying disasters.
Those who previously paid income taxes on these settlements may be eligible for refunds by filing amended returns with the Franchise Tax Board. Individuals are encouraged to seek advice from tax professionals regarding their specific situations.
