On December 12, 2024, President Biden signed the Federal Disaster Tax Relief Act of 2023 into law. This provision was long awaited by victims of hurricanes and wildfires in the past few years, and affects disasters declared between January 1, 2020 and February 9, 2025. This includes Hurricanes Idalia, Nicole, Fiona, Helene, Milton, Ian, and the California and Hawaii wildfires, and other specific disasters during this period.

Before this Act was passed, individuals could only deduct personal casualty losses as an itemized deduction to the extent the loss exceeded 10% of their adjusted gross income. The limitation on the deductible loss meant that many victims of disasters received no tax benefit from their casualty loss.

Under the new law, the loss is deductible whether the taxpayer itemizes or not. Additionally, the adjusted gross income limitation has been replaced. The deduction is now only reduced by $500 per casualty loss. 

In addition to the relief for losses, the act also provides that individual taxpayers can exclude from gross income compensation resulting from certain wildfires. Qualified wildfire relief payments received during taxable years beginning after December 31, 2019, and before January 1, 2026, are eligible for this provision. The same exclusion will apply to individual taxpayers receiving disaster relief payments due to the East Palestine, Ohio train derailment.

If you were a victim of a disaster as noted above, please contact Cray Kaiser at 630-953-4900 or by filling out this form. We will review your tax situation to determine if an amended return should be filed to claim the benefits provided under this Act.