Wildfire settlement taxes put survivors in financial limbo

By GABRIELA AOUN ANGUEIRA Thousands of survivors of the 2025 Eaton Fire in Altadena, California, have elected to accept an upfront settlement from the utility accused of causing it, forgoing future litigation for a faster payment that could help them rebuild or relocate. But unless a bill moving through Congress becomes law, that money could be taxed as income, taking big bites out of their payments and possibly disqualifying them from other government benefits. “There was this terrifying disbelief,” Bree Jensen, communications director for the Eaton Fire Long-Term Recovery Group, said of informing fellow residents about the tax. Thousands more who are suing the utility face the same prospect, as well as fire survivors in Colorado, Hawaii and Oregon after a tax exemption on wildfire-related compensation expired at the end of 2025.