The U.S. House of Representatives has passed the Federal Disaster Tax Relief Act of 2023 (H.R. 5863). If enacted, the bill would:
- Allow taxpayers who were subject to damages from hurricanes, wildfires and other federally declared disasters that occurred after February 25, 2021, to claim disaster-related losses without itemizing such deductions;
- Remove the requirement that such losses must exceed 10% of a claimant’s adjusted gross income to claim the disaster-related loss;
- Exclude from gross income any amount received by an individual after 2019 and before 2025 as compensation for expenses or losses incurred due to a qualified wildfire disaster, to the extent the losses were not already covered by insurance or other sources; and
- Exclude specified relief payments received by taxpayers for losses resulting from the East Palestine, Ohio, train derailment on February 3, 2023.
Similar provisions are also contained in the Tax Relief for American Families and Workers Act (TRAFWA). However, given the lack of movement in the Senate on the TRAFWA, the disaster relief provisions were moved separately out of the House in H.R. 5863. According to news sources, there is support to pass H.R. 5863 in the Senate. We will send another Flash E-mail should this occur.
The text of the bill is available at: www.congress.gov/bill/118th-congress/house-bill/5863/text
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