S. 3372, the Protect Innocent Victims of Taxation After Fire Extension Act, would exclude wildfire relief payments from federal income taxes. The bill allows individuals affected by federally declared wildfire disasters since 2015 to receive compensation for losses—including property damage, lost wages, living expenses, and personal injury—without reporting that money as taxable income, as long as those losses aren't already covered by insurance or other compensation. The exemption prevents people from being taxed twice on the same loss and blocks them from claiming tax deductions for expenses they've already been compensated for. The bill applies to payments received after December 31, 2025, and was introduced by a bipartisan group of senators including those from wildfire-prone states.
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