VICTORY FOR WILDFIRE VICTIMS: Hadwick, Dahle, and Lackey Secure Critical Relief in State Budget.
SACRAMENTO, CA – In a major win for wildfire victims across California, Assemblywoman Heather Hadwick (R-Alturas), alongside Senator Megan Dahle (R-Bieber) and Assemblymember Tom Lackey (R-Palmdale) announced today the recently passed state budget includes a long-overdue tax exemption for wildfire victim settlement payments for all fires from 2021 through 2030.
This tax exemption, included in AB 132, a budget bill, ensures wildfire victims who receive compensation for lost homes, businesses, and loved ones will not face unexpected tax bills. This critical relief comes after Governor Newsom vetoed AB 1973 (Lackey) and SB 542 (Dahle) last September – bills that aimed to provide similar protections from surprise tax liabilities. In his veto message, the Governor expressed support for the policy, but indicated that it needed to be addressed through the budget process. With the passage of this year’s budget, that promise has been fulfilled.
“This victory comes after months of bipartisan advocacy and tireless work to ensure all fire survivors are treated with fairness and dignity in the recovery process. Fires don’t care about your zip code or who you voted for, so when it comes to wildfire recovery, we have an obligation to provide equitable relief – to make all our communities whole again after enduring tragedy,” said Assemblymember Hadwick.
The achievement ensures all victims of recent and devastating fires – including the Bobcat, Dixie, McKinney, and Mill Fires – are not penalized for the compensation they’ve received to rebuild their homes and lives.
Assembly District 1 small business owner and fire survivor Doug Stoy remarked, “I would like to personally thank Assemblywoman Hadwick, Assemblyman Tom Lackey and Senator Dahle for their hard work and determination in making sure tax relief for recent fire victims in California was included in this year’s state budget. As a lifelong resident of Greenville and a small business owner with 20 employees, I’ve seen firsthand how devastating these fires have been to our community. Without their continuous efforts and commitment to communities like ours, I have no doubt this critical support would not have happened.”
“It was a cruel irony that those who had already endured so much were expected to shoulder the burden of taxation while trying to rebuild their lives,” said Assemblyman Tom Lackey. “I’m proud we were able to right this wrong – now wildfire victims can use their settlements, free from unfair taxes, to truly begin the process of recovery.”
The policy follows years of advocacy from lawmakers representing the state’s hardest-hit regions, including those in Southern California, Northern California, and rural fire-prone areas, where residents have long fought for equitable treatment.
“It has been deeply painful to hear from property owners who lost their homes in fires and received settlements that barely cover the cost of rebuilding – only to discover that steep income taxes on their settlements set back their recovery. This tax relief has been a long time coming, and I hope it helps families in wildfire-ravaged communities- from Happy camp to Greenville to Foresthill- find a strong new path forward,” said Senator Megan Dahle.
The exemption applies to all qualified taxpayers who suffered losses and received settlement payments as a result of California wildfires during the covered period. Lawmakers emphasized how this measure is a matter of equity, ensuring victims in both urban and rural areas receive the same opportunity to rebuild without unfair financial barriers.
“No one recovering from a wildfire should ever get a tax bill for losing their home. These payments are not income. They are the cost of tragedy,” remarked Assembly Republican Leader James Gallagher. “For years, survivors were forced to fight the state just to keep what little they had left. This fix is about basic decency. It is about giving families the freedom to rebuild without being punished for what they have already endured.”
Once AB 132 is signed by Governor Newsom, the tax exemption will take effect immediately and remain in place through 2030 due to the Legislature’s policy on the duration of tax exemptions.
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