Last year the House passed the Tax Relief for American Families and Workers Act which would have made Fire Victims Trust payments non-taxable at the Federal level, but that bill is stalled in Congress for political reasons.
The House just passed another bill focused just on Disaster Relief. The Federal Disaster Tax Relief Act of 2023 (H.R. 5863) is on its way to the Senate and we are told that there is support in the Senate to pass this disaster relief bill. The provisions of this bill include:
- 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.