Federal Disaster Tax Relief Act of 2023

Federal Disaster Tax Relief Act of 2023

This act extends the time period during which an area impacted by a major disaster may be considered a qualified disaster area, which allows certain taxpayers to qualify for an increased tax deduction for losses attributable to the disaster. This act also excludes East Palestine, Ohio, train derailment payments and qualified wildfire relief payments from income for federal tax purposes and extends the statute of limitations period for some refund or credit claims resulting from qualified wildfire relief payments.

Generally, individual taxpayers may claim an itemized tax deduction for unreimbursed personal casualty losses attributable to a federally declared disaster, to the extent that the loss exceeds $100 per casualty and total annual losses exceed 10% of adjusted gross income. However, personal casualty losses attributable to a qualified disaster area are deductible to the extent that they exceed $500 per casualty even if the taxpayer claims the standard deduction (rather than itemizing tax deductions) and are not subject to the 10% of adjusted gross income limitation. A qualified disaster area is an area impacted by a major disaster during a specific period of time.

The act extends the time period during which an area impacted by a major disaster may be considered a qualified disaster area and, therefore, allows disaster-related personal casualty losses sustained within those areas to be deducted to the extent such losses exceed $500 per casualty.

The act also treats East Palestine train derailment payments as qualified disaster relief payments, which allows such payments to be excluded from income for federal tax purposes. East Palestine train derailment payments include compensation received on or after February 3, 2023, for losses, damages, expenses, reduction in real property value, closing costs, or inconvenience resulting from the East Palestine train derailment if such amount was provided by

federal, state, or local government agencies;

Norfolk Southern Railway; or

any subsidiary, agent, or insurer of Norfolk Southern Railway.

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Written by analysts at the Congressional Research Service and published on Congress.gov, not by Civibrief. Summarized at the "Public Law" stage on December 12, 2024. It describes the bill, it is not the legal text.

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