Sponsors (32)
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Provides temporary tax and housing-credit relief for people and communities hit by federally declared disasters in early 2025. It lets certain disaster-affected taxpayers use prior-year earned income to compute refundable credits, expands special charitable deduction rules for disaster donations, creates retirement-plan distribution and loan relief, modifies personal casualty-loss rules to increase deductions, and raises state low-income housing credit ceilings for disaster-zone developments.
This bill provides targeted, temporary tax and financing tools to speed disaster recovery for households, donors, employers, and state housing projects, but does so at the cost of reduced federal revenue, added administrative complexity, limited time windows that leave some victims out, and potential long‑term risks to retirement security.
Low- and moderate-income taxpayers who experience a qualified disaster in 2025 can use prior-year earned income to preserve or increase refundable CTC and EITC amounts (including a married-joint coordination rule) and certain incorrect elections can be treated as clerical errors, reducing audit/correction burdens.
Individuals, corporations, and food donors are incentivized to give immediate cash and food relief to disaster areas through temporarily enhanced charitable deduction rules (including higher deductibility for qualifying cash gifts, 100% corporate deduction options, and a reduced food-donation test), increasing short‑term funding for relief organizations.
Disaster-affected individuals gain easier access to retirement funds (penalty-free withdrawals up to $100,000, three-year recontribution/rollover window, three‑year income spreading, larger plan loans and delayed repayments) and plan amendments implementing these rules are treated retroactively as proper, easing cash access and reducing sponsor compliance risk.
Multiple provisions (credit income substitution, enhanced charitable deductions, expanded casualty/standard‑deduction rules, tax exclusions, and higher LIHTC ceilings) increase federal outlays or reduce revenue, raising budgetary pressures that could lead to higher deficits or shifted costs to taxpayers.
Several key benefits are time‑limited or narrowly targeted (one‑year earned‑income substitution, donor/deduction windows, specific 2026–2027 LIHTC rules, and a tight Stafford Act incident window), leaving many disaster victims, donors, or projects outside the covered periods with no relief.
The bill adds administrative and compliance complexity for taxpayers, donors, employers, plan administrators, and state housing agencies (new elections and acknowledgments for donations, documentation and calculations for disaster losses, complex rollover/spreading rules, loan administration, and allocation rules), increasing transaction costs and potential need for professional help.
Introduced December 18, 2025 by Judy Chu · Last progress December 18, 2025