Congress restores tax deduction for disaster and crime victims
S. 1773 — Tax Relief for Victims of Crimes, Scams, and Disasters Act · Filed by Tammy Baldwin (D-WI) · 7 cosponsors · Introduced May 15, 2025 · Referred to committee
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What it does
This bill reinstates the federal tax deduction for personal casualty losses (damage from crimes, scams, disasters) that was eliminated in 2017. It also extends the deadline for taxpayers to file amended returns and claim refunds for years 2018–2024 when they could not claim the deduction, allowing them to recover taxes paid on income they could have offset with casualty losses.
Why we flagged it
The bill's sole operative mechanism is to restore a deduction that was removed by the 2017 Tax Cuts and Jobs Act (Public Law 115-97), and to allow taxpayers to claim refunds for years when the deduction was unavailable. It is a straightforward restoration of a prior tax benefit.
What the text implies
- The refund window is limited to returns filed before January 1, 2025, and claims must be filed by the tax-filing deadline for the year of enactment; taxpayers who miss this window lose the refund opportunity even if they are otherwise eligible.
- The deduction applies only to personal casualty losses under Section 165(c)(3), which excludes business casualty losses and certain other loss categories; the scope is narrower than a full restoration of all casualty-loss deductions.
The full analysis lists 3 implications of this text.
Who stands to gain
Individual taxpayers who suffered uninsured personal casualty losses (2018–2024)