Wildfire Victim Tax Relief and Recovery Act
Wildfire Victim Tax Relief and Recovery Act
Plain Language Summary
# Wildfire Victim Tax Relief and Recovery Act - Summary **What the bill does:** This bill would provide tax relief to farmers and individuals affected by wildfires in Texas. Specifically, it would allow farmers to delay paying taxes on profits from selling livestock lost to fires (similar to existing rules for livestock sales due to drought or floods). It would also allow individuals to exclude certain disaster relief payments related to specific Texas wildfires from their taxable income, meaning they wouldn't owe federal taxes on that relief money. **Who it affects and key provisions:** The bill primarily benefits Texas farmers and residents impacted by recent wildfires. For farmers, it extends the current two-year tax deferral period to four years when livestock must be sold due to fire damage—giving them more time to rebuild their herds without facing immediate tax bills on the sale proceeds.
For individuals receiving disaster relief payments, those funds would be excluded from their taxable income, reducing their overall tax burden during recovery. **Current status:** The bill (S. 496) was introduced in the 119th Congress by Senator Ted Cruz and is currently in committee, meaning it has not yet been debated or voted on by the full Senate. No action has been taken as of this summary.
CRS Official Summary
Wildfire Victim Tax Relief and Recovery ActThis bill allows farmers to defer taxes on gain from the sale or exchange of livestock because of a fire. (Conditions apply.) The bill also allows individuals to exclude from gross income (for tax purposes) certain disaster relief payments received in connection with specific Texas wildfires.Currently, farmers may defer gain on the sale or exchange of livestock (other than poultry) held for draft, breeding, or dairy purposes due to drought, flood, or other weather-related conditions for two years (four years if attributable to a federally-declared disaster). Otherwise, under current law, gain on the sale of livestock (including poultry) due to such weather-related conditions attributable to a federally-declared disaster may be deferred for one year. (Conditions apply.)The bill adds fire to the list of circumstances for which the gain on the sale or exchange of livestock may be deferred, thus allowing farmers to defer such gains for up to four years (depending on the type of livestock and whether the sale is attributable to a federally-declared disaster).The bill also allows individuals to exclude from gross income payments received from federal, state, or local government agencies or Xcel Energy (or any subsidiary, insurer, or agent of Xcel Energy) as compensation for unreimbursed losses, damages, and certain expenses attributable to theSmokehouse Creek, 687 Reamer, and Roughneck Fires (Hutchinson County, Texas, February and March 2024);Windy Deuce Fire (Moore County, Texas, February 2024); andGrape Vine Creek Fire (Gray County, Texas, February 2024).
Latest Action
Read twice and referred to the Committee on Finance.