Congress extends tax breaks for disaster and wildfire victims through 2027

What it does

This bill makes permanent and extends two tax breaks for disaster victims: (1) it allows individuals in federally declared major disasters (2019–2027) to deduct personal casualty losses more generously—lowering the threshold from $500 to $100 per loss and allowing net disaster losses to bypass the normal 10% income floor—and (2) it excludes from taxable income any compensation received for wildfire losses, expenses, or damages (including lost wages, living costs, and emotional distress) from federally declared wildfire disasters (2015–2027), as long as those losses aren't already covered by insurance. Both provisions apply retroactively to 2025 and 2026 tax years.

Why we flagged it

The bill's core function is to codify and extend temporary tax relief provisions for disaster and wildfire victims, making permanent what were previously time-limited rules and expanding eligibility thresholds. It is straightforward tax relief legislation, not a hidden carve-out or deregulation.

What the text implies

• The bill retroactively applies to 2025 and 2026 tax years (effective date is after Dec. 31, 2024), meaning taxpayers who have already filed returns for those years may be entitled to amended returns or refunds, creating administrative burden on IRS.
• The wildfire relief exclusion (§139M) covers 'emotional distress' compensation, a category broader than typical casualty-loss deductions and potentially subject to interpretation disputes.
• The bill sunsets both provisions on Jan. 1, 2027, creating uncertainty for disaster victims in late 2026 and requiring future legislative action to extend relief beyond that date.
• The exclusion of wildfire compensation from gross income may interact unpredictably with state tax systems and other federal benefit programs (FEMA, SBA loans) that may treat the same compensation differently.

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

Who it affects

Disaster and wildfire victims receive tax relief that reduces their federal tax burden during recovery, lowering the cost of rebuilding and allowing more of disaster compensation to be retained. The provisions are narrowly tailored to genuine disaster areas and time-limited (2019–2027 for disasters, 2015–2027 for wildfires), ensuring the benefit flows to people who suffered actual losses.

Who stands to gain

• individuals in federally declared disaster areas (2019–2027)
• individuals affected by federally declared wildfire disasters (2015–2027)

Named in the bill

Internal Revenue Code of 1986, Section 165(h), Section 63(b), Section 139M (new), Robert T. Stafford Disaster Relief and Emergency Assistance Act, Federal Emergency Management Agency (FEMA), Taxpayer Certainty and Disaster Tax Relief Act of 2020, Public Law 116–260, Public Law 119–21

Where it stands

14 cosponsors: 8 Democrats, 6 Republicans.

• Sep 15, 2025 — Introduced · Congress.gov: “Introduced in House”
• Sep 15, 2025 — Referred to House Committee on Ways and Means and Senate Committee on Finance · Congress.gov: “Referred to the House Committee on Ways and Means”
• Mar 25, 2026 — Markup held in committee · Congress.gov: “Committee Consideration and Mark-up Session Held”
• Mar 25, 2026 — Reported out of committee · Congress.gov: “Ordered to be Reported in the Nature of a Substitute by the Yeas and Nays: 43 - 0”
• Apr 27, 2026 — Passed the House · Congress.gov: “On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H3107-3108)”
• Apr 27, 2026 — Floor vote scheduled · Congress.gov: “Mr. Smith (MO) moved to suspend the rules and pass the bill, as amended”
• Aug 7, 2026 — Passed both chambers · Congress.gov: “Passed Senate without amendment by Unanimous Consent”
• Sep 3, 2026 — Sent to president · Congress.gov: “Presented to President”
• Sep 11, 2026 — Signed into law · Congress.gov: “Signed by President”

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

Money around this bill

1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $40,000 in lobbying spend. A filing names 5 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 0% of bills with at least one filing.

W. Steube, the sponsor, reported $646,500 in PAC receipts in the 2026 cycle.

• Berkshire Hathaway Energy — $40,000 on 1 filing

Lobbying Disclosure Act filings through Jul 8, 2026. A filing shows who paid to lobby on a bill it names, not what changed.