Disaster victims get tax-credit lifeline when income drops
S. 3432 — Working Families Disaster Tax Relief Act · Filed by Amy Klobuchar (D-MN) · 1 cosponsor · Introduced Dec 11, 2025 · Referred to committee
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What it does
This bill allows families affected by federally declared disasters to use their income from the previous year instead of the current year when calculating eligibility for the child tax credit and earned income tax credit. This helps disaster-affected workers whose income dropped due to the disaster to still qualify for or receive larger tax credits they would have gotten in a normal year.
Why we flagged it
The bill is a straightforward tax-code amendment providing temporary relief to disaster-affected families by allowing them to use prior-year income for tax-credit calculations. It is a narrow, time-limited relief measure tied to federally declared disasters.
What the text implies
- The bill does not specify an end date for the election; it applies to 'taxable years beginning after December 31, 2024' but does not state when the relief expires, potentially creating ambiguity about whether future disaster years are covered.
- The definition of 'disaster-affected taxpayer' includes both those whose principal place of abode/work is in the zone AND those displaced from their abode, which may create edge cases around temporary relocation or work-from-home arrangements during disaster recovery.
The full analysis lists 3 implications of this text.
Who stands to gain
disaster-affected families and workers; low-to-moderate income households reliant on child tax credit and earned income tax credit