The Internal Revenue Service announced on June 5, 2024 that in many cases payments received by individuals affected by last year’s train derailment in East Palestine, Ohio, are not taxable. The Feb. 3, 2023, derailment qualifies as “an event of a catastrophic nature.” As a result, various payments made to affected individuals by  Norfolk Southern or one its subsidiaries  are “qualified disaster relief payments,” which, by law, are excluded from gross income.

Tax-free qualified disaster relief payments made by Norfolk Southern are:

  • One-time $1,000 “inconvenience” payments to affected individuals;
  • Relocation expenses and expenses for replacing clothing and personal items;
  • Cost of repairing or rehabilitating homes and the surrounding environment;
  • Compensation to homeowners who sold their homes after the derailment; and
  • Medical expenses.

Taxable payments include:

  • Lost wages;
  • Access payments to property owners to allow the common carrier access to the train track for remediation and to clean nearby creeks and streams; and
  • Payments to businesses.

If you have already filed your 2023 taxes and included non-taxable income as taxable income, the IRS provides instructions on how to amend your 2023 tax return.

If you have not yet filed your 2023 taxes, the IRS provides instructions on how to prepare your return to exclude non-taxable income.

If you have questions about whether a particular payment is taxable or not, you should consult with a tax professional or contact Community Legal Aid.