In a significant development for wildfire victims in California, Assemblywoman Heather Hadwick (R-Alturas), along with Senator Megan Dahle (R-Bieber) and Assemblymember Tom Lackey (R-Palmdale), announced that the recently passed state budget includes a tax exemption for settlement payments received by wildfire victims for fires occurring from 2021 to 2030.
This tax exemption, part of AB 132, ensures that those affected by wildfires who receive compensation for lost homes, businesses, and loved ones will not be burdened by unexpected tax liabilities. The measure comes after the veto of AB 1973 and SB 542 by Governor Newsom last September, which sought to provide similar protections. The Governor expressed support for the intent of those bills but indicated that the issue needed to be resolved through the state budget process. With the current budget’s passage, that commitment has been fulfilled.
Assemblymember Hadwick stated, “This victory comes after months of bipartisan advocacy and tireless work to ensure all fire survivors are treated with fairness and dignity in the recovery process. Fires don’t care about your zip code or who you voted for, so when it comes to wildfire recovery, we have an obligation to provide equitable relief.”
The policy ensures that victims from recent catastrophic fires, such as the Bobcat, Dixie, McKinney, and Mill Fires, will not face penalties related to the compensation they received to rebuild their lives.
Doug Stoy, a small business owner and fire survivor, expressed gratitude towards the lawmakers, highlighting the devastating impact of these fires on communities and the critical nature of the support provided.
Assemblyman Tom Lackey remarked on the irony of expecting those who have already suffered significant losses to bear tax burdens, emphasizing the importance of this relief in aiding recovery efforts.
Senator Megan Dahle addressed the pain experienced by property owners who faced steep taxes on settlements that barely covered rebuilding costs, hoping the tax relief will facilitate a better recovery path for affected families.
The exemption will apply to all eligible taxpayers who received settlements due to California wildfires within the specified timeframe. Lawmakers highlighted that this measure aims to ensure equitable treatment for all victims, regardless of their location.
Assembly Republican Leader James Gallagher underscored the injustice of imposing taxes on disaster recovery funds, framing the initiative as a matter of basic decency.
Once AB 132 receives Governor Newsom’s signature, the tax exemption will take effect immediately and will remain in effect until 2030, consistent with the Legislature’s
