Key insights
- If you were affected by a recent federally declared disaster, there is new tax relief that could help.
- The newly enacted Federal Disaster Tax Relief Act of 2023 allows individual taxpayers affected by federally declared disasters to deduct personal casualty losses without itemizing deductions and without the typical reduction of $100 per casualty loss and 10% of adjusted gross income.
- Instead, the deduction would be reduced by $500 per casualty loss. The relief covers any area where the president declared a major disaster between January 1, 2020, and February 10, 2025.
Get help filing for new federal disaster relief tax benefits.
Were you affected by a recent federally declared disaster? There’s new tax relief that could help.
What is the Federal Disaster Tax Relief Act?
The newly enacted Federal Disaster Tax Relief Act of 2023 allows individual taxpayers affected by federally declared disasters to deduct personal casualty losses without itemizing deductions and without the typical reduction of $100 per casualty loss and 10% of adjusted gross income. Instead, the deduction would be reduced by $500 per casualty loss.
The relief covers any area where the president declared a major disaster between January 1, 2020, and February 10, 2025.
CLA insight: The disaster relief covers personal casualty losses incurred by victims of Hurricanes Ian, Idalia, Nicole, Fiona, Debby, Helene, and Milton, among other disasters. If you need help determining whether you’re within a federally declared disaster area, contact us or refer to the IRS disaster relief page.
Tax relief for losses from wildfires
The act also permits individual taxpayers to exclude from gross income compensation for expenses or losses resulting from certain wildfires, thus excluding that compensation from taxable income. This applies to qualified wildfire relief payments received during taxable years beginning after December 31, 2019, and before January 1, 2026.
CLA insight: It’s still unclear whether qualified wildfire relief payments received through a pass-through entity can be excluded from the gross income of individual partners, S corporation shareholders, or trust beneficiaries. We’ll keep you apprised of any clarifications from the IRS on this topic.
Tax relief related to the East Palestine, Ohio train derailment
The act also allows individual taxpayers to exclude from gross income any disaster relief payments received on or after February 3, 2023, by people affected by the February 2023 train derailment in East Palestine, Ohio.
How CLA can help with federal disaster tax relief
Filing for tax relief related to federally declared disasters can be complicated, considering the new rules. CLA’s tax team can help determine if you qualify and help you file correctly.
Contact us
Get help filing for new federal disaster relief tax benefits. Complete the form below to connect with CLA.If you are unable to see the form below, please complete your submission here.