{"id":2595637,"date":"2026-04-27T11:52:58","date_gmt":"2026-04-27T15:52:58","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-wildfire-survivors-who-lost-their-homes-could-suffer-massive-tax-increase-from-settlement-payouts\/"},"modified":"2026-04-27T12:04:40","modified_gmt":"2026-04-27T16:04:40","slug":"california-wildfire-survivors-who-lost-their-homes-could-suffer-massive-tax-increase-from-settlement-payouts","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-wildfire-survivors-who-lost-their-homes-could-suffer-massive-tax-increase-from-settlement-payouts\/","title":{"rendered":"California Wildfire Survivors Who Lost Their Homes Could Suffer Massive Tax Increase from Settlement Payouts"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"&quot;\"><div class=\"counts mashsbcount\">30<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcalifornia-wildfire-survivors-who-lost-their-homes-could-suffer-massive-tax-increase-from-settlement-payouts%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2595637&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>Thousands of people affected by the 2025 Eaton Fire in Altadena, California have opted too take upfront settlement payments tied to alleged utility responsibility so they can rebuild sooner. But they face uncertainty over whether those payments will be taxed as income unless Congress extends a wildfire <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/how-will-joe-bidens-tax-hike-impact-average-americans\/\" title=\"How Will Joe Biden\u2019s ... Hike Impact Average Americans?\">tax exemption<\/a>. A House bill that would exclude certain wildfire-related disaster compensation from taxable income passed the House Ways and Means Committee with bipartisan support, but the path and timing for floor action in the House and any Senate vote are still unclear-leaving survivors in financial limbo.<\/p>\n<p>Fire victims in other states, including Colorado, Hawaii, and Oregon, might potentially be affected as well as the wildfire tax relief waiver expired after 2025. Survivors say taxes could substantially reduce settlement amounts and may also jeopardize eligibility for other government benefits, making rebuilding harder as <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/new-home-construction-unexpectedly-plunges-as-bidenflation-pushes-costs-through-the-roof\/\" title=\"New Home Construction Unexpectedly Plunges as Bidenflation Pushes Costs Through The Roof\">construction costs<\/a> rise and insurance becomes more expensive. The article also describes how utility settlements and compensation programs are intended to provide faster relief, even as investigations continue and litigation proceeds.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><br \/>\n<!DOCTYPE html PUBLIC \"-\/\/W3C\/\/DTD HTML 4.0 Transitional\/\/EN\" \"http:\/\/www.w3.org\/TR\/REC-html40\/loose.dtd\"><br \/>\n<?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><html><body><\/p>\n<section> \t\t\t\t<script>console.log(\"ad slot (AC1)\")<\/script><script>console.log(\"ad slot (IC1)\")<\/script><script>console.log(\"ad slot (IC2)\")<\/script><script>console.log(\"ad slot (IC3)\")<\/script><script>console.log(\"ad slot (IC4)\")<\/script><script>console.log(\"ad slot (REP_0)\")<\/script><script>console.log(\"ad slot (REP_1)\")<\/script><script>console.log(\"ad slot (REP_2)\")<\/script><script>console.log(\"ad slot (REP_3)\")<\/script><\/p>\n<p>Thousands of survivors of the 2025 Eaton Fire in Altadena, California, have elected to accept an upfront settlement from the utility accused of causing it, forgoing future litigation for a faster payment that could help them rebuild or relocate.<\/p>\n<p>But unless a bill moving through Congress becomes law, that money could be taxed as income, taking big bites out of their payments and possibly disqualifying them from other government benefits.<\/p>\n<p>\u201cThere was this terrifying disbelief,\u201d Bree Jensen, communications director for the Eaton Fire Long-Term Recovery Group, said of informing fellow residents about the tax.<\/p>\n<p>Thousands more who are suing the utility face the same prospect, as well as fire survivors in Colorado, Hawaii, and Oregon after a tax exemption on wildfire-related compensation expired at the end of 2025.<\/p>\n<p>In recent years, Congress has shielded wildfire settlements from taxes, but legislation to do so was short-lived and a struggle to pass, leaving gaps between laws that risk saddling some survivors with a possible tax burden on their compensation.<\/p>\n<p> <script type=\"text\/javascript\"> \t\t\tif ( getCookie( \"ff_subbed\" ) ) { \t\t\t\tdocument.getElementById(\"anyclipvideo\").remove() \t\t\t} else { \t\t\t\tdocument.addEventListener(\"DOMContentLoaded\", function() { \t\t\t\t\tfunction loadAnyclip() { \t\t\t\t\t\tconst container = document.getElementById(\"anyclipvideo\"); \t\t\t\t\t\tif (!container) return;  \t\t\t\t\t\tconst script = document.createElement(\"script\"); \t\t\t\t\t\tscript.src = \"https:\/\/player.anyclip.com\/anyclip-widget\/lre-widget\/prod\/v1\/src\/lre.js\"; \t\t\t\t\t\tscript.setAttribute(\"pubname\", \"westernjournalcom\"); \t\t\t\t\t\tscript.setAttribute(\"widgetname\", \"001w000001jULVcAAO_M12924\");  \t\t\t\t\t\t\/\/ append inside the container so player shows in correct spot \t\t\t\t\t\tcontainer.appendChild(script); \t\t\t\t\t} \t\t\t\t\tfunction findPreviousParagraph(selector, x) { \t\t\t\t\t\tconst targetElement = document.querySelector(selector); \t\t\t\t\t\tif (!targetElement) { \t\t\t\t\t\t\tconsole.warn(\"Target element not found.\"); \t\t\t\t\t\t\treturn null; \t\t\t\t\t\t}  \t\t\t\t\t\t\/\/ Get all <\/p>\n<p> elements in order as they appear in the document \t\t\t\t\t\tlet paragraphs = Array.from(document.querySelectorAll(\"p\"));  \t\t\t\t\t\t\/\/ Find the index of the last <\/p>\n<p> before the target element \t\t\t\t\t\tlet targetIndex = paragraphs.findIndex(p => p.compareDocumentPosition(targetElement) & Node.DOCUMENT_POSITION_PRECEDING);  \t\t\t\t\t\tif (targetIndex === -1 || targetIndex < x) { \t\t\t\t\t\t\tconsole.warn(\"Not enough paragraphs before the target element.\"); \t\t\t\t\t\t\treturn null; \t\t\t\t\t\t}  \t\t\t\t\t\treturn paragraphs[targetIndex - x]; \t\t\t\t\t}  \t\t\t\t\t\/\/ Set up IntersectionObserver \t\t\t\t\tfunction observeElement(element) { \t\t\t\t\t\tif (!element) return;  \t\t\t\t\t\tconst observer = new IntersectionObserver( \t\t\t\t\t\t\t(entries) => { \t\t\t\t\t\t\t\tentries.forEach(entry => { \t\t\t\t\t\t\t\t\tif (entry.isIntersecting) { \t\t\t\t\t\t\t\t\t\tconsole.log(\"Paragraph is now visible:\", entry.target.textContent.trim()); \t\t\t\t\t\t\t\t\t\tloadAnyclip(); \t\t\t\t\t\t\t\t\t\tobserver.disconnect(); \t\t\t\t\t\t\t\t\t} \t\t\t\t\t\t\t\t}); \t\t\t\t\t\t\t}, \t\t\t\t\t\t\t{ threshold: 0.5 } \/\/ Adjust threshold as needed \t\t\t\t\t\t);  \t\t\t\t\t\tobserver.observe(element); \t\t\t\t\t}  \t\t\t\t\t\/\/ Find the 1st paragraph before #anyclipvideo and observe it \t\t\t\t\tlet paragraphToObserve = findPreviousParagraph(\"#anyclipvideo\", 2); \t\t\t\t\tobserveElement(paragraphToObserve); \t\t\t\t}); \t\t\t} \t\t<\/script> <\/p>\n<p>A bipartisan House bill to extend the tax relief passed out of committee last month, but the timeline for bringing it to a floor vote and when the Senate will take action are unknown, leaving survivors in financial limbo.<\/p>\n<p>\u201cWe have to assume we don\u2019t have that money, so we\u2019re making decisions, choosing cheaper materials, forgoing the solar,\u201d said one Altadena homeowner, who spoke on the condition of anonymity because she fears compromising her expected settlement of about $700,000. If that money counts as income, she expects taxes would take 37%.<\/p>\n<p>The homeowner hoped accepting a settlement would get her family home faster, after she, her husband and their four pets spent more than a year hopping between relatives\u2019 houses and rentals.<\/p>\n<p>\u201cAll we wanted was to rebuild a comfortable house and get out of the situation we were in,\u201d she said, adding their construction costs alone are estimated to reach $1 million.<\/p>\n<p>As survivors watch lawmakers lock horns over the Iran war and the record-long Department of Homeland Security shutdown, some worry extending <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/bipartisan-duo-works-around-gop-leaders-to-force-vote-on-social-security-bill-washington-examiner\/\" title=\"Bipartisan duo works around GOP leaders to force vote on Social Security bill - Washington Examiner\">disaster tax relief<\/a> will be de-prioritized.<\/p>\n<p>\u201cPeople have low expectations of anything actually getting done,\u201d said Jenn Kaaoush, a 2021 Marshall Fire survivor and town council member in Superior, Colorado.<\/p>\n<p>Compensation has become crucial to rebuilding.<\/p>\n<p>Utility equipment is believed to have sparked some of the deadliest and most destructive fires in recent years. Multi-billion dollar settlements have become common after these fires but take years to resolve.<\/p>\n<p>As construction costs soar and insurance becomes more expensive and difficult to secure, compensation from lawsuits has become a critical component of how many households start over.<\/p>\n<p>\u201cIt\u2019s the difference between towns getting rebuilt and not getting rebuilt, quite frankly,\u201d said attorney Doug Boxer, who has represented more than 17,000 Californians in cases against utilities and is part of the LA Fire Justice coalition suing Southern California Edison and its parent company, Edison International, on behalf of more than 2,000 clients.<\/p>\n<p>SCE and Edison International have acknowledged their power equipment may have sparked the Eaton Fire, which destroyed 9,000 structures and killed 19 people.<\/p>\n<p>The utility last year announced a compensation program for those impacted, promising fast payments based on the value of one\u2019s losses, as well as an additional premium for not joining litigation against the utility.<\/p>\n<p>More than 2,800 households have applied for the compensation program. Thousands more are joining lawsuits against the utility. An investigation into the Eaton Fire\u2019s cause is ongoing.<\/p>\n<p>Households can\u2019t afford to lose a chunk of their payments to taxes, said Jensen, whose home also burned. \u201cIt sounds like a lot of money, but not in regards to how expensive it is to actually build in the community.\u201d<\/p>\n<p>A bipartisan bill would extend tax relief.<\/p>\n<p>Payments related to federally declared wildfire disasters from 2015 through 2026 would not count toward taxable income, according to <a href=\"https:\/\/www.congress.gov\/bill\/119th-congress\/house-bill\/5366\/text?s=2&#038;r=1&#038;hl=hr5366\">legislation approved unanimously<\/a> by the House Ways and Means Committee last month. That would apply to payouts received in 2026 and after.<\/p>\n<p>The measure would extend expanded tax relief for property losses from federal disasters through this year, a provision that helped attract bipartisan support from lawmakers representing states vulnerable to hurricanes and other extreme weather.<\/p>\n<p>Florida Rep. Greg Steube \u2014 a Republican who championed the 2024 tax relief bill and introduced its successor with fellow Republican Rep. Doug LaMalfa, now deceased, and with Democratic Reps. Mike Thompson and Jimmy Panetta of California \u2014 told The Associated Press he expects the legislation to ultimately pass, but he acknowledged \u201cthe exact timeline remains uncertain.\u201d<\/p>\n<p>Steube, whose southwest Florida constituents could benefit from the <a href=\"https:\/\/amzn.to\/3YuVZYV\" >provision deducting personal casualty losses<\/a>, has vowed to push the law forward.<\/p>\n<p>Two similar bills were introduced in the Senate, but further action has not been taken.<\/p>\n<p>After lobbying for the past and present bills as executive director of the survivor advocacy nonprofit After The Fire, Jennifer Gray Thompson said she believes lawmakers understand the bipartisan nature of disaster tax relief.<\/p>\n<p>\u201cAs these disasters come in quick succession, we are going to have to adapt on all levels, and our tax code will have to adapt along with it,\u201d she said.<\/p>\n<p>Still, Gray Thompson said she can\u2019t be sure when action will come.<\/p>\n<p>Survivors in Colorado, Hawaii and Oregon would also be impacted.<\/p>\n<p>Maui residents face similar challenges as they await payments from a $4 billion settlement with Hawaiian Electric. Only about 180 homes have been rebuilt in Lahaina among 2,200 structures destroyed.<\/p>\n<p>What Lahaina survivors need most is \u201ccertainty,\u201d Maui County Mayor Richard Bissen wrote to lawmakers in a letter supporting tax relief.<\/p>\n<p>While the majority of destroyed homes in Superior have been rebuilt, Kaaoush, the town council member, said most survivors are still catching up financially after finding themselves underinsured.<\/p>\n<p>She also worries that her constituents could be knocked off income-qualified government benefits for food, health care or veterans\u2019 support if their wildfire payments count as income.<\/p>\n<p>\u201cThis has second- and third-order impacts on their life that will do harm,\u201d Kaaoush said.<\/p>\n<p>Gray Thompson cautioned that while survivors waiting for relief can defer taxes or amend past returns, resolving issues with government programs, such as qualifying for <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/journalism-is-the-most-regretted-college-major-2\/\" title=\"Journalism Is the Most Regretted College Major\">college financial aid<\/a>, is much harder. \u201cThere\u2019s no way to undo that,\u201d she said.<\/p>\n<p>Meanwhile, many in Altadena feel they\u2019re continually facing new obstacles to returning home, said another resident who also lost his home and insisted on anonymity because of ongoing litigation.<\/p>\n<p>Being taxed \u201cwould just add more pain and suffering for us, really,\u201d he said.<\/p>\n<p style=\"font-style: italic;\">The Western Journal has not reviewed this Associated Press story prior to publication. Therefore, it may contain editorial bias or may in some other way not meet our normal editorial standards. 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