Oregon HB 4078: Relating to an income tax subtraction allowed for plaintiffs in wildfire litigation; prescribing an effective date.

Bill Text

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83rd OREGON LEGISLATIVE ASSEMBLY--2026 Regular Session
House Bill 4078
Sponsored by Representative DIEHL, Senators GIROD, MEEK, Representative GOMBERG; Representatives BOICE,
BREESE-IVERSON, BUNCH, EDWARDS, HELFRICH, LEVY B, LEWIS, MANNIX, MCINTIRE, NOSSE,
OSBORNE, OWENS, PHAM H, SCHARF, SKARLATOS, YUNKER, Senators FREDERICK, SMITH DB,
THATCHER, WEBER (Presession filed.)
SUMMARY
The following summary is not prepared by the sponsors of the measure and is not a part of the body thereof subject
to consideration by the Legislative Assembly. It is an editor’s brief statement of the essential features of the
measure as introduced. The statement includes a measure digest written in compliance with applicable readability
standards.
Digest: Exempts awards from and legal fees paid in wildfire suits from corporate excise and in-
come tax. (Flesch Readability Score: 76.5).
Creates Oregon corporate excise and income tax subtractions for amounts received in resolution
of a civil action arising from wildfire. Creates Oregon corporate excise and income tax subtractions
for wildfire-related legal fees paid by plaintiffs. Allows a taxpayer to amend a return to claim a
refund for the earliest tax year in which a subtraction is allowed.
Applies to declarations and executive orders issued on or after January 1, 2018, and before
January 1, 2027, and to amounts received, losses incurred and legal fees paid in tax years beginning
on or after January 1, 2018.
Takes effect on the 91st day following adjournment sine die.
A BILL FOR AN ACT
Relating to an income tax subtraction allowed for plaintiffs in wildfire litigation; and prescribing
an effective date.
Be It Enacted by the People of the State of Oregon:
SECTION 1. Sections 2 and 3 of this 2026 Act are added to and made a part of ORS
chapter 317.
SECTION 2. (1) There shall be subtracted from federal taxable income any amount re-
ceived in judgment or settlement of a civil action arising from a wildfire, as defined in ORS
477.089, and awarded to a plaintiff.
(2) A subtraction under this section is allowed only for resolution of civil actions arising
from a wildfire that:
(a) Is the subject of a state of emergency declared by the Governor;
(b) Occurs in an area subject to an executive order of the Governor invoking the Emer-
gency Conflagration Act under ORS 476.510 to 476.610; or
(c) Is a federally declared disaster, as defined in section 165 of the Internal Revenue Code,
whether located within Oregon or elsewhere.
(3) A subtraction under this section:
(a) Is not allowed for any amount described in subsection (1) of this section that is taken
into account as a deduction or credit on the taxpayer’s federal income tax return for any tax
year; and
(b) Is allowed only to the extent that losses, expenses or other damages compensated by
the amount of the judgment or settlement are not compensated for by insurance or other-
wise.
SECTION 3. (1) As used in this section:
NOTE: Matter in boldfaced type in an amended section is new; matter [italic and bracketed] is existing law to be omitted.
New sections are in boldfaced type.
LC 70

HB 4078
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(a) “Wildfire” means a wildfire as defined in ORS 477.089, that:
(A) Is the subject of a state of emergency declared by the Governor;
(B) Occurs in an area subject to an executive order of the Governor invoking the Emer-
gency Conflagration Act under ORS 476.510 to 476.610; or
(C) Is a federally declared disaster, as defined in section 165 of the Internal Revenue
Code, whether located within Oregon or elsewhere.
(b) “Wildfire-related litigation” means litigation through which a plaintiff seeks compen-
sation for losses, expenses or damages found to be caused by a wildfire.
(2) There may be subtracted from federal taxable income any amount of legal fees in-
curred by a plaintiff in wildfire-related litigation that is not otherwise allowed as a deduction
to the taxpayer, as incurred in the tax year by the taxpayer.
(3) A subtraction under this section is allowed regardless of whether the taxpayer elects
to deduct itemized deductions on the taxpayer’s federal or state return.
SECTION 4. Sections 5 and 6 of this 2026 Act are added to and made a part of ORS
chapter 318.
SECTION 5. (1) There shall be subtracted from federal taxable income any amount re-
ceived in judgment or settlement of a civil action arising from a wildfire, as defined in ORS
477.089, and awarded to a plaintiff.
(2) A subtraction under this section is allowed only for resolution of civil actions arising
from a wildfire that:
(a) Is the subject of a state of emergency declared by the Governor;
(b) Occurs in an area subject to an executive order of the Governor invoking the Emer-
gency Conflagration Act under ORS 476.510 to 476.610; or
(c) Is a federally declared disaster, as defined in section 165 of the I