Sponsors (8)
The bill restores tax relief for personal casualty and theft losses and allows some late refund claims to help households recover, but it does so at the cost of increased federal outlays and administrative burden, and it benefits a limited class of taxpayers rather than all who faced suspended deductions.
Taxpayers (including middle‑class and low‑income households) can again deduct personal casualty and theft losses for tax years after 2017, lowering taxable income and helping households recover from disasters or thefts.
Taxpayers who previously had personal casualty loss deductions suspended can file refund claims up to the return due date (with extensions) for the year of enactment and recover overpayments even if the normal statute of limitations would have expired.
The bill establishes a clear, uniform cutoff (the return due date) for filing these refund claims, giving taxpayers and the IRS administrative clarity on processing timelines.
Reinstating and allowing late claims for casualty loss deductions increases federal revenue losses and potential short‑term IRS outlays for refunds, which could worsen deficits or require offsets elsewhere.
Applying the change retroactively and permitting late claims creates administrative complexity and extra workload for taxpayers and the IRS, likely increasing amended‑return processing and delaying resolution of other cases.
The extension is limited to personal casualty loss overpayments, leaving taxpayers with other suspended deductions unable to benefit and raising fairness concerns.
Based on analysis of 3 sections of legislative text.
Restores the individual personal casualty/theft loss deduction (retroactive to 2018 tax years) and extends refund filing time for certain affected past returns.
Official title: Amend the Internal Revenue Code of 1986 to reinstate the deduction for personal casualty losses as in effect prior to the enactment of Public Law 115-97.
Introduced May 15, 2025 by Tammy Baldwin · Last progress May 15, 2025
Restores the federal personal casualty and theft loss deduction that had been narrowed by prior law and gives some taxpayers more time to claim refunds or credits tied to those previously disallowed deductions. The restoration applies retroactively to tax years starting after December 31, 2017. For taxpayers who filed earlier returns (ending before January 1, 2025) and were affected by the suspension, the bill extends the statute of limitations so they can file refund/credit claims tied to those casualty losses by the due date (with extensions) of the return for the year that includes the bill's enactment date.