Thompson's Disaster Tax Relief Bill: Bipartisan Letter Sent To Senate

NORTH BAY, CA — U.S. Rep. Mike Thompson announced that a bipartisan group of 78 members of Congress joined him in urging Senate Leaders Schumer, Wyden, McConnell and Crapo to take up the bipartisan Federal Disaster Tax Relief Act.

Thompson also announced Thursday that Bipartisan Policy Center Action has endorsed the bill.

The legislation passed the House as House Resolution 5863 in May and would retroactively exempt thousands of qualified wildfire victims in California, including PG&E fire victims, from having to pay federal income tax on their settlement money or pay tax on attorney fees that are included in the settlement.

The bill would also exclude from taxpayer gross income, for income tax purposes, relief payments for losses resulting from the Feb. 3, 2023 train derailment in East Palestine, Ohio, and designates Hurricane Ian, among other federally declared disasters, as a qualified disaster for the purposes of determining the tax treatment of certain disaster-related personal casualty losses.

“Through no fault of their own, too many Americans have incurred thousands of dollars in disaster-related expenses.," Thompson said. "It’s wrong to tax disaster victims on the settlement money meant to help them rebuild their lives. Thank you to my colleagues, Democrats and Republicans alike, for joining me to advocate for this much-needed relief for wildfire and other disaster victims. Thank you to Bipartisan Policy Center Action, as well, for recognizing the importance of this relief and endorsing this legislation. Now, Senate leadership must work with us to deliver tax relief to the disaster victims who have been waiting for it."

The 79-member group sent a letter Thursday advocating for Senate Leadership to take up the Federal Disaster Tax Relief Act. Thompson serves as the ranking member of the Ways and Means Subcommittee on Tax. He introduced the original legislation to provide tax relief to PG&E fire victims in the 117th Congress and has worked to advance the legislation ever since.

In May, Thompson and U.S. Rep. Greg Steube of Florida led a bipartisan group of 218 members of Congress to successfully advance a discharge petition that forced House Speaker Mike Johnson to bring the Federal Disaster Tax Relief Act to the House floor for a vote. Thompson and Steube’s historic advancement marked only the third time a House discharge petition has succeeded in the 21st Century. The bill passed with strong bipartisan support and Thompson and Steube continue to advocate for the Senate to take up the bill and pass it.

"Since the Senate failed to pass the bipartisan tax package, which included my bill to deliver tax relief, Senate leadership must now permit my stand-alone disaster relief bill to pass swiftly through the Senate on unanimous consent," Steube said. "My bill precedes the larger package and received resounding support across the aisle in the House (382-7). Americans can’t wait for disaster relief. Florida, Georgia, and South Carolina sustained major impacts from Hurricane Debby, further underscoring the need to pass this bill as soon as possible. Millions of Americans affected by more than 300 disasters in 48 states will be helped by this legislation. The Senate must finish the job."

BPC Action has endorsed the Federal Disaster Tax Relief Act. BPC Action is the advocacy partner of the Bipartisan Policy Center and engages in advocacy, education, and outreach to bring Democrats and Republicans together to achieve policy changes on critical issues.

“BPC Action applauds Reps. Greg Steube (R-FL) and Mike Thompson (D-CA) for their continued efforts to enact the Federal Disaster Tax Relief Act. Too often, the cards are stacked against disaster survivors working tirelessly to rebuild their homes, communities, and lives. The Federal Disaster Tax Relief Act would address one significant burden by exempting the compensation households have received for certain disaster-related losses, expenses, and damages from federal income taxes. The bill's 36 bipartisan House sponsors, historic discharge petition, and overwhelmingly bipartisan vote on the House Floor demonstrate the breadth of support in Congress for helping those affected by devastating disasters. With families having now waited years for this much-needed relief, BPC Action urges the Senate to quickly pass this important legislation,” said Michele Stockwell, President, BPC Action.

See the full letter sent to Senate Leadership here.