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Federal tax exemptions for wildfire victims end in 2026, forcing survivors to pay taxes on settlement funds.
Congress has not extended the 2024 Federal Disaster Tax Relief Act, ending federal income tax exemptions for wildfire settlement payments starting in 2026.
Survivors of fires like the 2020 Labor Day Fires in Oregon will now owe federal taxes on compensation for living expenses, lost wages, injuries, and legal fees.
A $5 million settlement could result in a tax bill of up to one-third of the amount.
While Oregon passed a state-level tax exemption, a bill requiring utilities to cover federal tax liabilities failed.
Legal advocates warn the loss of relief will worsen financial strain during recovery.
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Las exenciones de impuestos federales para las víctimas de incendios forestales terminan en 2026, obligando a los sobrevivientes a pagar impuestos sobre los fondos de liquidación.