Congress expands tax deductions for homeowners hit by disasters

What it does

This bill repeals a tax rule that currently limits homeowners' ability to deduct personal casualty losses (damage from disasters like floods, fires, or storms) on their federal income taxes. Under current law, homeowners can only deduct casualty losses that exceed 10% of their adjusted gross income and only if total losses exceed $100 per incident. The bill removes this limitation entirely, allowing homeowners to deduct more disaster-related losses starting in 2025.

Why we flagged it

The bill's sole operative mechanism is a tax deduction expansion for homeowners suffering casualty losses. It is a straightforward tax relief measure with no hidden riders or cross-purposes.

What the text implies

• The repeal applies retroactively to losses sustained after December 31, 2024, meaning homeowners may be able to amend prior-year returns to claim larger deductions if this bill passes.
• Removing the 10% AGI floor and $100 threshold may increase the federal tax revenue cost significantly in disaster years, as the Joint Committee on Taxation would need to score the revenue impact.
• The bill does not distinguish between insured and uninsured losses, so homeowners with full insurance coverage could theoretically claim deductions for losses already covered by insurance proceeds, creating a potential double-benefit if not addressed in IRS guidance.

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

Who it affects

Homeowners facing disaster losses gain a direct tax benefit by deducting more of their uninsured or underinsured losses, reducing their federal tax burden in years when they suffer property damage. This is particularly valuable for lower- and middle-income homeowners who may lack full insurance coverage and face the 10% AGI floor as a barrier to any deduction.

Who stands to gain

• homeowners (individual taxpayers)
• disaster-affected households

Named in the bill

Internal Revenue Code of 1986, Section 165(h), House Committee on Ways and Means

Where it stands

1 cosponsor: 1 Democrats.

• Jan 16, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jan 16, 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.