HR 5225S 2744119th CongressIn Committee

Protect Innocent Victims of Taxation After Fire Extension Act

Introduced: Sep 9, 2025

Economy & Taxes

Chamber Versions:

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Protect Innocent Victims of Taxation After Fire Extension Act would add a new tax provision to exclude certain wildfire relief payments from an individual’s gross income. In short, if a person receives a qualified wildfire relief payment to cover losses, expenses, or damages from a federally declared wildfire disaster (and the payment isn’t already covered by insurance), that payment would not be taxable. The measure also bars double benefits (no additional deductions/credits or basis increases tied to these excluded amounts) and sets a sunset, with the exclusion applicable for amounts received after 12/31/2025 but ending after 12/31/2032. The new provision would be placed in the Internal Revenue Code as Sec. 139M.

Key Points

1Creates a new exclusion from gross income: qualified wildfire relief payments are not taxable to the recipient.
2Definition of qualified wildfire relief payment: payments for losses, expenses, or damages (including additional living expenses, certain lost wages, personal injury, death, or emotional distress) related to a qualified wildfire disaster, to the extent not compensated by insurance or otherwise; excludes certain employer-paid lost wages that would have otherwise been paid by the employer.
3Definition of qualified wildfire disaster: any federally declared disaster (per 165(i)(5)(A)) declared after 12/31/2014 due to a forest or range fire.
4Denial of double benefit: no deduction or credit for expenditures to the extent of the excluded amount, and no increase in the basis/adjusted basis of property from the excluded amount.
5Effective date and sunset: the exclusion applies to amounts received after 12/31/2025 and, by its terms, terminates for amounts received after 12/31/2032 (i.e., it is temporary).

Impact Areas

Primary group/area affected: Individuals who receive wildfire relief payments after a federally declared wildfire disaster (especially those not otherwise covered by insurance) and residents in affected areas.Secondary group/area affected: Taxpayers in disaster relief programs, including those coordinating relief (e.g., governments, nonprofits) who provide payments that would be treated as qualified wildfire relief payments.Additional impacts: Potential changes to tax planning for disaster relief, interaction with other relief funds or insurance reimbursements, and effects on personal tax liability and recordkeeping due to the sunset provision (temporary nature of the exclusion).

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