Congress Passes Federal Disaster Tax Relief Act
The U.S. Senate recently unanimously passed the Federal Disaster Tax Relief Act of 2023 (H.R. 5863), designating a series of presidentially-declared disasters as qualified disaster events. The bill will now be sent to President Joe Biden for his signature.
The legislation designates that hurricanes including Ian, Idalia, Nicole, Fiona, Debby, Helene and Milton should be treated as qualified disaster events for purposes of determining the tax treatment of certain disaster-related personal casualty losses. The legislation allows individuals subjected to damages from hurricanes and other federally declared disasters to claim these losses without itemizing the deductions. Also, the losses do not have to exceed 10% of a claimant’s adjusted gross income to qualify. The legislation covers any major disasters that occur up to six months after a president signs a disaster declaration.
Additionally, the legislation excludes from taxpayer gross income, for income tax purposes, any amount received by an individual taxpayer as compensation for expenses or losses incurred due to a qualified wildfire disaster declared after 2014. It also excludes relief payments for losses resulting from the East Palestine, Ohio, train derailment that occurred in February 2023.
The legislation passed the U.S. House in May of this year following a discharge petition, where the bill bypassed committee review and moved directly to the House floor for a vote.
On Nov. 26, TSCPA sent a letter to our members of Congress urging them to consider targeted tax relief policies that would maximize relief and support recovery for communities in Tennessee impacted by natural disasters, including the most recent devastation caused by Hurricane Helene. We commend their efforts to provide much-needed disaster relief for Tennesseans.