IRS decides people who got money from Norfolk Southern after Ohio derailment won't be taxed on it

Most people who received money from Norfolk Southern in the wake of last year's fiery train derailment in eastern Ohio won't have to pay taxes on millions of dollars in aid payments after all.

The Internal Revenue Service said Wednesday that it had decided that most of the payments people who live near East Palestine, Ohio, received to help them pay for temporary housing or replace their belongings aren't taxable because the Feb. 3, 2023, derailment that forced thousands of people to evacuate their homes qualified as “an event of a catastrophic nature.”

The railroad estimates that it has paid more than $21 million to residents after the derailment as part of more than $107 million in assistance it has offered to the communities affected by the catastrophic train crash.

The fact that residents were told they had to pay taxes on the money from the railroad was a sore spot for the people who are still struggling to recover from the derailment.