Wyden secures legislation to prevent taxes on wildfire settlement payments

WASHINGTON, D.C. (KTVZ) -- U.S. Sen. Ron Wyden, D-Oregon, passed legislation Friday to provide immediate tax relief to Americans who lose their homes in federally declared natural disasters, including wildfires. The measure removes taxes on settlement payments received by victims of unpredictable natural disasters.

The bill addresses tax provisions originally enacted under a 2017 tax bill. While the Senate successfully suspended these taxes in 2024, the protections were set to expire this year, potentially leaving disaster victims liable for taxes on their recovery funds.

The legislation reached a final vote in the Senate after Wyden persuaded opponents to withdraw an earlier procedural roadblock that had stalled the measure. The bill previously passed the House of Representatives on a bipartisan basis.

Sen. Wyden, D-Oregon, emphasized that the bill is designed to support residents currently facing wildfire risks. “Common sense prevailed today and that's great news for Oregonians who shouldn't have to worry about getting slammed with a huge tax hit on top of losing their home to wildfire,” Wyden said. “I'm heading home this weekend to meet with Oregonians facing these wildfire threats and I can't wait to deliver this good news in person to them and the firefighters working around the clock to protect communities throughout our state.”

The legislation now heads to the White House to be signed into law. Wyden is scheduled to meet with firefighters and Oregon residents this weekend to discuss the impact of the new tax protections.