# Plain Language Summary: Wildfire Damage Tax Relief Bill

This bill makes changes to how people are taxed when they receive money related to wildfire damage. Specifically, it creates two tax breaks for people dealing with wildfire losses. First, if you hire a lawyer to help you get compensation for wildfire damage and you win your case, you can now deduct what you paid that lawyer from your taxes. Second, if you receive a settlement or insurance payout for wildfire damages, that money won't count as income that gets taxed.

Here's why this matters in practical terms: Imagine a wildfire destroys your home and you hire an attorney to fight with your insurance company or pursue a lawsuit to get fair compensation. Under current tax law, if you win and receive money, you have to pay taxes on that entire amount—even though it's just replacing what you lost. Plus, you can't deduct the attorney fees you paid to get that money. This bill fixes both problems. The settlement money stays yours without triggering a tax bill, and the lawyer fees become tax-deductible, which reduces your overall tax burden.

This relief applies specifically to wildfire damages, which is important because wildfires have become increasingly destructive and expensive for homeowners and businesses in fire-prone states. The bill recognizes that people shouldn't be penalized by the tax system when they're already dealing with the financial devastation of losing their property to fire. It's designed to help people recover more of what they've lost rather than having a portion go to taxes.

To amend the Internal Revenue Code of 1986 to establish a deduction for attorney fees awarded with respect to certain wildfire damages and to exclude from gross income settlement funds received with respect to such damages.

LaMalfa, Doug

 <p>This bill allows a deduction from gross income (above the line deduction) for attorney fees and court costs awarded with respect to a qualifying wildfire disaster (i.e., any forest or range fire that is a federally declared disaster, occurs in a disaster area, and occurs in 2015 or later). </p> <p>The bill excludes from the gross income of a taxpayer, for income tax purposes, amounts paid to compensate victims for losses or damages in connection with a qualifying wildfire disaster.</p>