Senate sends disaster tax relief bill to Trump, CBO pegs 10-year revenue cost at $408 million

The Doug LaMalfa Federal Disaster Tax Relief Certainty Act cleared the Senate on Aug. 7 and now awaits President Donald Trump's signature, with the Congressional Budget Office estimating the bill will reduce federal revenue by $408 million between 2026 and 2036. The legislation removes the income-based floor on individual disaster tax deductions and designates all wildfire relief payments as untaxable income, covering federally declared disasters from December 28, 2019, through July 4, 2025.

The income threshold on the table

Current law restricts individual disaster deductions to taxpayers whose property damage from a federally declared disaster reaches at least 10% of their adjusted gross income. The floor is concrete: on a $100,000 income, a homeowner must absorb $10,000 in qualifying losses before claiming any deduction at all. The bill removes that threshold entirely for disasters within the covered window.

The 2025 California wildfires fall within that range. The fires destroyed nearly 13,000 housing units and generated damage estimates of between $28.0 billion and $53.8 billion, per the Los Angeles County Economic Development Corporation. Under the current structure, victims whose losses fell below the proportional floor received no deduction. The bill closes that gap retroactively for the covered period.

The bipartisan path to passage

Sen. Adam Schiff, a California Democrat, and Sen. Rick Scott, a Florida Republican, co-sponsored the measure. Scott said he traveled to Los Angeles to visit the burned lot of Spencer Pratt, a Republican who ran for Los Angeles mayor and lost his home in the Palisades wildfire. That meeting, Scott said, led him to push for the legislation.

Pratt responded publicly, crediting both senators for working across the aisle and writing that financial relief makes a real difference when disaster recovery is already hard. Good leadership, Pratt wrote, is rare.

The bill is named for Doug LaMalfa, who represented a northern California district in the House for 13 years and advocated for agricultural interests before dying in January after a heart-related medical emergency. James Johansson, a Republican farmer running for the California State Assembly, also credited Schiff and Scott publicly for getting the bill across the line.

What to watch

Trump's signature is the remaining step. If signed, the income threshold removal applies to disasters between December 28, 2019, and July 4, 2025, a window the California wildfires fall within. Schiff's office had not responded to Fox News Digital's request for comment as of Monday.