Sponsors (15)
The bill expands tax relief and tax-free payments for many disaster and wildfire victims — including non-itemizers and retroactive wildfire sufferers — but does so at the cost of reduced federal revenue, date-limited eligibility that can exclude some victims, and tax rules that may limit other deductions or raise future capital gains for property owners.
Individuals affected by qualifying wildfires (federally declared forest or range fire disasters from 2015–2026) can receive various disaster relief payments tax-free, reducing their out-of-pocket recovery costs for living expenses, lost wages (except employer-paid), personal injury, death, and emotional distress.
Individuals in presidentially declared disaster areas can deduct disaster-related personal casualty losses that exceed 10% of AGI, increasing post-disaster tax relief for homeowners and other affected taxpayers who itemize.
Taxpayers who take the standard deduction (non-itemizers), including many low- and moderate-income individuals, can claim the portion of casualty losses attributable to a qualified net disaster loss so they still receive tax relief after disasters.
Taxpayers generally: expanding these deductions and exclusions will reduce federal income tax revenue and could modestly increase the deficit or reduce funds available for other programs.
Homeowners and property owners receiving excluded disaster payments: the excluded payments cannot increase a property's tax basis, which may raise future capital gains tax when the property is sold.
Taxpayers who receive excluded disaster relief payments: to the extent expenses are covered by those tax-free payments, recipients cannot also claim tax deductions or credits for the same expenses, reducing other tax benefits they might have used.
Based on analysis of 3 sections of legislative text.
Expands casualty-loss tax relief for certain major disasters (2019–2026) and excludes specified wildfire relief payments from taxable income while denying duplicate tax benefits.
Official title: Doug LaMalfa Federal Disaster Tax Relief Certainty Act
Introduced September 15, 2025 by W. Greg Steube · Last progress August 7, 2026
Creates a special tax rule letting individuals claim larger casualty-loss deductions for losses from qualified federal major disasters that occur between Dec 28, 2019 and Dec 31, 2026, and permits non-itemizers to claim their share of that deduction. It also makes certain federally declared wildfire relief payments tax-free by excluding them from gross income and preventing double tax benefits. The casualty-loss change applies to taxable years beginning after Dec 31, 2024; the wildfire-payment exclusion applies to payments received in taxable years beginning after Dec 31, 2025. The bill modifies existing Internal Revenue Code rules, adjusts the $500 floor treatment, and clarifies interactions with earlier disaster-tax laws.