Californians could receive tax breaks on all wildfire-related settlements under recent bills

Bills that would exempt Californians from paying taxes on settlement money related to wildfires have received early support from state lawmakers.

One introduced by Republican Sen. Scott Wilk, representing Santa Clarita, would apply to payments for properties in the state that were damaged or destroyed by fire.

The Legislature has approved such tax breaks on a fire by fire basis. Wilk, at a recent hearing, told lawmakers that practice has left communities behind.

He pointed to rural residents affected by a 2020 fire in Southern California, who have not yet received a similar benefit.

“All wildfire victims should be afforded the same tax relief,” he said.

Senate Bill 1004, which would be retroactive to the 2020 tax year, is now headed to the Senate Appropriations Committee.

So is a measure introduced by Sen. Brian Dahle. The Republican, who represents Bieber, is calling for a more expansive exemption: for settlement money related to any natural disaster, not just a fire.

To qualify both the governor of California and the president of the United States would have to declare a state of emergency for the event.

Dahle called Senate Bill 927 “common sense.”

A representative for the Howard Jarvis Taxpayers Association was the only supporter of the measures at the recent hearing who was not a legislator. Neither bill received any opposition. Yet they face challenges.

A proposal introduced in the Assembly last year, which would have also granted a tax break on payments related to all wildfire settlements, stalled in a committee. Beyond that, the state is in a difficult financial situation: The Legislative Analyst’s Office last month projected a shortfall as high as $73 billion for the 2024-25 budget year.

Wilk, in a statement, acknowledged the challenge, but said the issue deserved to be brought up again until everyone has the same opportunity.