Federal Disaster Tax Relief Act of 2025
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Progress
Where this bill stands in the legislative process.
- Introduced
- Passed Senate
- Passed House
- To President
- Became Law
Overview
This bill, the Federal Disaster Tax Relief Act of 2025, modifies tax rules to provide greater relief to individuals affected by major disasters and wildfires. It increases the amount of casualty losses that can be deducted, reduces the standard deduction, and creates a tax exclusion for compensation received as wildfire relief payments. The bill aims to simplify the process for claiming disaster-related tax benefits and provide more comprehensive support to those impacted by these events.
Key provisions
- Increases the maximum disaster loss deduction to $100, down from $500.
- Expands the definition of ‘qualified disaster area’ to include areas declared as major disasters starting after July 4, 2025, and before January 1, 2027.
- Allows individuals to deduct qualified net disaster losses exceeding 10% of their adjusted gross income.
- Creates a tax exclusion for ‘qualified wildfire relief payments’ received as compensation for losses from wildfires.
- Defines ‘qualified wildfire relief payment’ as compensation for losses not covered by insurance.
- Establishes ‘qualified wildfire disasters’ as Federally declared disasters resulting from forest or range fires after December 31, 2014.
- Limits the application of the wildfire relief exclusion to payments received between 2026 and 2030.
- Amends the standard deduction to include a ‘disaster loss deduction’.
Who is affected
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