As we’ve discussed in earlier posts on this site, for most taxpayers, the settlements from PG&E will be partially or fully taxable. However, relief from California tax may be coming.

AB1249 passed the assembly last week and is going to the State Senate for review. If this bill passes, it would exclude the PG&E settlement money from gross income for California income tax purposes (Note: it would still be taxable to the Feds). This treatment would be awarded to victims of the 2015 Butte Fire, the 2017 North Bay Fires, and the 2018 Camp Fire.

This bill stalled in the assembly for almost a year, so it is unclear if it will actually pass or not. But if you are going to be eligible for this exclusion, you may want to wait to file your 2021 California Income Tax Return.