IRS offers tax relief, extensions to California wildfire victims: What to know

In less than a week, four fires around the nation’s second biggest city have ignited more than 62 square miles - roughly three times the size of Manhattan.

Most of that destruction has been from the Eaton Fire near Pasadena and the Palisades Fire, in a wealthy enclave along the Pacific Coast. Firefighters have made progress on both fronts in recent days, with the Eaton Fire roughly one-third contained.

As thousands remain under evacuation orders and warnings across LA, the Internal Revenue Service and State of California have announced tax relief for individuals and businesses affected by the wildfires.

SUGGESTED: LIVE: Palisades Fire crews prepare for another round of ferocious winds

Impacted taxpayers now have until Oct. 15, 2025, to file various federal individual and business tax returns and make tax payments.

Who qualifies?

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, individuals and households that reside or have a business in Los Angeles County qualify for tax relief.

"California is taking greater action to continue supporting businesses that have been devastated by the Southern California wildfires," said Gov. Gavin Newsom. "We are strong because of the diversity of our businesses, and we stand by them - providing relief to aid them through this difficult time."

The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

How long is the extension?

The tax relief postpones various tax filing and payment deadlines that occurred from Jan. 7, 2025, through Oct. 15, 2025 (postponement period). As a result, affected individuals and businesses will have until Oct. 15, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Oct. 15, 2025, deadline will now apply to:

  • Individual income tax returns and payments normally due on April 15, 2025.
  • 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
  • 2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, and estimated tax payments normally due on April 15, June 16 and Sept. 15, 2025.
  • Quarterly payroll and excise tax returns normally due on Jan. 31, April 30 and July 31, 2025.
  • Calendar-year partnership and S corporation returns normally due on March 17, 2025.
  • Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
  • Calendar-year tax-exempt organization returns normally due on May 15, 2025.

What about penalties?

In addition, penalties for failing to make payroll and excise tax deposits due on or after Jan. 7, 2025, and before Jan. 22, 2025, will be abated as long as the deposits are made by Jan. 22, 2025.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

Additional tax relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2025 return normally filed next year), or the return for the prior year (2024). 

Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. 

For individual taxpayers, this means Oct. 15, 2026. Be sure to write the FEMA declaration number – 4856-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

The California Department of Tax Fee and Administration is offering the following relief efforts:

  • Extensions to file returns: CDTFA returns and payments due on or before January 31, 2025, are automatically extended to April for Los Angeles County taxpayers whose last return was for less than $1 million in tax. This includes sales and use tax, as well as most other programs administered by CDTFA. A list of all tax programs included in this extension can be found here.
  • Additional relief from interest and penalties: Impacted business owners not subject to the automatic extension or who require additional relief are encouraged to contact CDTFA for assistance.
  • Copies of CDTFA tax records: Taxpayers who need to obtain copies of CDTFA tax records can receive replacements free of charge.
  • Help with updating account information: This could include changing an address, opening or closing a business location, or obtaining a copy of a seller’s permit or CDTFA-issued license.

The automatic extensions for sales and use tax returns and payments to April 30, 2025, are eligible to those taxpayers who owed less than $1 million in sales and use tax on their 2024 third quarter returns.

The Source: This story was reported with information from the Internal Revenue Service and the office of Gov. Gavin Newsom.

WildfiresMoneyConsumer