Details of Public Law 118-148, section 3 , Federal Disaster Tax Relief Act of 2023

This section provides that qualified wildfire relief payments received by an individual are excluded from gross income.

This section defines the term “qualified wildfire relief payments” as any amount received by or on behalf of an individual as compensation for losses, expenses, or damages (including additional living expenses compensation, lost wages (other than compensation that would have been paid by the employer for such wages), personal injury, death, or emotional distress) incurred as a result of a qualified wildfire disaster that were not compensated by insurance or otherwise.

The section defines the term “qualified wildfire disaster” as a federally declared disaster as defined under Internal Revenue Code (IRC) section 165(i)(5)(A), declared after 12/31/2014, as a result of any forest or range fire.

Additionally, the section disallows a deduction or credit to the person for whose benefit a qualified wildfire relief payment is made, for any expenditure to the extent of the amount excluded. In addition, no increase in the basis or adjusted basis of property is allowed as a result of the amount excluded.

The section extends the time for a credit or claim for refund for an additional year after 12/12/2024. The section also removes limitations on the amount of credit or claim for refund.

The estimated revenue impact to conform to the above federal provisions would result in the following loss:

24/25 25/26 26/27 27/28 N/A ($33,000,000) N/A N/A