Tax relief for disaster victims: use prior-year income to boost refunds

What it does

This bill allows people whose earned income dropped due to a federally declared disaster to use their prior year's higher income to calculate the Earned Income Tax Credit (EITC) and Child Tax Credit instead. If a disaster victim earned less in the disaster year than the year before, they can elect to use the prior year's income figure to determine their tax credits, potentially increasing their refund or reducing their tax liability.

Why we flagged it

The bill is a narrowly tailored tax relief measure for a specific vulnerable population (disaster victims) facing temporary income loss. It uses the tax code as the delivery mechanism for disaster assistance, which is standard practice.

What the text implies

• The lookback rule applies to both EITC and Child Tax Credit (CTC), meaning families with children may see larger benefits than single workers.
• The provision is elective — taxpayers must affirmatively claim it, which may reduce uptake among disaster victims unfamiliar with tax code changes or lacking access to tax preparation services.
• Joint return treatment allows either spouse to qualify as a 'qualified individual,' broadening eligibility for married couples where one spouse was in the disaster area.
• The bill treats incorrect use of the lookback rule as a 'mathematical or clerical error' under IRC § 6213(g)(2), meaning the IRS can correct it without the taxpayer's consent — a procedural safeguard but also a signal that compliance may be complex.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Disaster victims who lose income due to federally declared disasters gain access to higher tax credits by using prior-year earnings, directly offsetting financial hardship from the disaster. The provision is elective, costs nothing to non-disaster-affected taxpayers, and targets a vulnerable population experiencing temporary income loss.

Who stands to gain

• disaster-affected individuals and families
• low-to-moderate income earners eligible for EITC and CTC

Named in the bill

Internal Revenue Code of 1986, Section 32 (Earned Income Tax Credit), Section 24(d) (Child Tax Credit), Section 165(i)(5) (disaster definitions), Federal Emergency Management Agency (FEMA), Section 6213(g)(2) (mathematical/clerical errors)

Where it stands

7 cosponsors: 7 Democrats.

• Jun 12, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jun 12, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

3 lobbying clients named this bill on 5 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $4,984,758 in lobbying spend. A filing names 17 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 61% of bills with at least one filing.

Timothy Kennedy, the sponsor, reported $590,800 in PAC receipts in the 2026 cycle.

• Aicpa Association of International Certified Professional Accountants — $2,999,000 on 2 filings
• National Association of Mutual Insurance Companies — $1,005,758 on 2 filings
• Association of Equipment Manufacturers — $980,000 on 1 filing

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.