Doug LaMalfa Protect Innocent Victims of Taxation After Fire Extension Act

This bill amends the Internal Revenue Code to exclude qualified wildfire relief payments from an individual's gross income for tax purposes, applying to amounts received after December 31, 2025, and before January 1, 2033.

Sec. 2, Exclusion from gross income for compensation for losses or damages resulting from wildfires: This section adds a new tax code section 139M. It says gross income does not include any amount an individual gets as a qualified wildfire relief payment. A qualified wildfire relief payment is money received as compensation for losses, expenses, or damages (like extra living costs, lost wages not from the employer that would have paid them, personal injury, death, or emotional distress) from a qualified wildfire disaster, but only if the losses are not covered by insurance or other compensation. A qualified wildfire disaster is any federally declared disaster declared after December 31, 2014, because of a forest or range fire. The section also prevents double benefits: no deduction, credit, or property basis increase is allowed for any expense or property to the extent it is covered by the excluded payment. This exclusion stops applying to amounts received after December 31, 2032. The bill also makes a clerical change to the tax code's table of sections to list the new section 139M. The effective date is for amounts received after December 31, 2025.