Disaster victims get tax break, but only if they file by 2030
S. 2744 — Federal Disaster Tax Relief Act of 2025 · Filed by Rick Scott (R-FL) · 4 cosponsors · Introduced Sep 9, 2025 · Referred to committee
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What it does
This bill creates temporary tax relief for individuals who suffer losses from major disasters (wildfires and other presidentially declared disasters) occurring between July 2025 and January 2027. It allows disaster victims to deduct casualty losses above 10% of their income (instead of the normal 100% threshold) and excludes wildfire relief payments from taxable income, provided those payments don't duplicate insurance or other compensation. The relief expires after 2030.
Why we flagged it
The bill's core function is to provide temporary tax relief to individuals suffering losses from federally declared disasters, primarily wildfires. It modifies casualty loss deduction rules and creates an exclusion for wildfire relief payments, both narrowly tailored to disaster recovery.
What the text implies
- The 10% AGI threshold for disaster losses is significantly lower than the standard 100% threshold for non-disaster casualty losses, creating a two-tier system that may incentivize disaster-loss documentation and potentially increase audit scrutiny of disaster claims.
- The wildfire relief payment exclusion (Section 139M) applies only to payments received in 2026–2030, meaning disaster victims who receive compensation after 2030 will not benefit from the exclusion, creating a cliff effect for delayed settlements.
The full analysis lists 4 implications of this text.
Who stands to gain
disaster victims and homeowners; individuals with uninsured or underinsured property losses