Source: United States House of Representatives – Representative Judy Chu (CA2-27)
WASHINGTON, D.C. – Yesterday, the bipartisan Doug LaMalfa Federal Disaster Tax Relief Certainty Act became law, delivering long-awaited tax relief for survivors of the January 2025 Los Angeles County fires.
The law ensures that qualifying wildfire relief payments, including settlements received by Eaton Fire survivors, can be excluded from federal taxable income regardless of when those payments are received.
Rep. Judy Chu (CA-28), a member of the House Ways and Means Committee, has fought for federal tax relief for Eaton Fire survivors since the aftermath of the fire. Earlier this year, she introduced H.R. 6842, the Disaster Survivors Tax Relief and Recovery Act, comprehensive legislation to address this and several additional financial barriers facing families rebuilding after major disasters.
Rep. Chu released the following statement:
“This marks a major victory for Eaton Fire survivors and a testament to what Congress can accomplish when Democrats and Republicans come together to put disaster survivors first. From the beginning, I have fought to make sure families who lost their homes, their savings, and so much more in the Eaton Fire would not then be punished with a massive federal tax bill on the very compensation they need to rebuild. After months of work in Congress, we finally got this relief across the finish line.
With this bipartisan legislation now law, Eaton Fire survivors can receive qualifying wildfire relief payments without worrying that the federal government will take a portion of that recovery money in taxes simply because their settlements arrived after an arbitrary deadline. Survivors have already lost far too much. They deserve to keep the full value of the compensation they receive to rebuild their homes and their lives.
I am incredibly proud to have fought alongside colleagues on both sides of the aisle to deliver this relief. Earlier this year, I introduced my Disaster Survivors Tax Relief and Recovery Act because I believe our tax code should help families recover from disasters, not make recovery harder. Today, a critical piece of the relief I have been fighting for is finally law.
But making wildfire settlements tax-free is only one piece of the enormous financial challenge survivors face. My legislation would go further, including by allowing disaster survivors to withdraw up to $100,000 from their retirement accounts without the usual early-withdrawal penalty; protecting access to the Earned Income Tax Credit and refundable Child Tax Credit for eligible families whose incomes fell after a disaster; expanding incentives for charitable disaster relief; providing additional Low-Income Housing Tax Credits to spur housing construction in disaster-affected communities; and providing additional tax relief for disaster losses.
These protections are desperately needed. Two out of three Eaton Fire survivors have still not returned home. Nearly half have exhausted their savings or taken on debt, and the typical homeowner still faces an estimated $500,000 rebuilding gap.
That is why the next major step must be President Trump fully funding Governor Newsom’s disaster supplemental request, with no strings attached, to deliver the federal disaster funding our communities have been waiting far too long to receive. Without that investment, recovery efforts will stall, costs will continue to grow, and families will remain unable to come home.
While we celebrate this hard-fought bipartisan victory for disaster survivors, the fight continues. I will keep pushing to enact the remaining provisions of my Disaster Survivors Tax Relief and Recovery Act and to secure the federal disaster funding necessary to make our communities whole.”