Congress·In Progress·H.R. 5366

Federal Disaster Tax Relief Act of 2025

Rep. Steube Introduces Bipartisan Bill to Provide Tax Relief for Disaster and Wildfire Victims

1 day ago·View on Congress.gov·Read full text

The Federal Disaster Tax Relief Act of 2025 is currently moving through the House Ways and Means Committee. The committee recently voted to approve the bill, meaning it is now ready to be reported to the full House for further consideration. It is actively moving forward with no further committee actions scheduled at this time.

Legislative Progress

House

Senate

President

Law

Key Points

People hit by major disasters declared between July 2025 and the end of 2026 can deduct their personal casualty losses from their taxes, even if they take the standard deduction instead of itemizing. This "disaster loss deduction" gets added on top of the standard deduction, making it accessible to far more taxpayers.
The bill removes the usual rule that limits casualty loss deductions to amounts exceeding 10% of your adjusted gross income. For qualified disaster losses, you can deduct the full amount, which means more money stays in your pocket to help with rebuilding.
Wildfire victims won't owe federal income tax on compensation they receive for losses, injuries, extra living expenses, or lost wages tied to any federally declared wildfire since 2014. This exclusion covers payments received in tax years 2026 through 2030.
From policy text
“Gross income shall not include any amount received by an individual as a qualified wildfire relief payment.”
View in full text
The wildfire tax exclusion is broad — it covers compensation for "losses, expenses, or damages (including compensation for additional living expenses, lost wages...personal injury, death, or emotional distress)" as long as insurance hasn't already covered those costs.
From policy text
“any amount received by or on behalf of an individual as compensation for losses, expenses, or damages (including compensation for additional living expenses, lost wages (other than compensation for lost wages paid by the employer which would have otherwise paid such wages), personal injury, death, or emotional distress)”
View in full text
This is a bipartisan bill introduced by Reps. Steube, Thompson, LaMalfa, and Panetta — a mix of Republican and Democratic members from disaster-prone states like Florida and California — signaling broad support for helping disaster survivors.
From policy text
“Mr. Steube (for himself, Mr. Thompson of California, Mr. LaMalfa, and Mr. Panetta) introduced the following bill; which was referred to the Committee on Ways and Means”
View in full text

TaxesHousingEnergy Environment

Impact Analysis

Personal Impact

Who is affectedScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

State Impacts

StateScoreImpactCertaintyScopeDurationSentiment

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

3 milestones4 actions

Mar 25, 2026House

Ordered to be Reported by the Yeas and Nays: 43 - 0.

Mar 25, 2026House

Committee Consideration and Mark-up Session Held

Sep 15, 2025House

Referred to the House Committee on Ways and Means.

Sep 15, 2025

Introduced in House

What Happens Next

Projected impacts based on AI analysis

Early 2026 (if enacted)

Expanded casualty loss deductions become available for disaster losses starting in tax year 2025

People who suffered losses from major disasters declared after July 4, 2025 could claim bigger deductions on their 2025 tax returns, even if they use the standard deduction

Tax year 2026 through 2030

Wildfire compensation payments become tax-free starting in tax year 2026

Wildfire victims receiving settlement money, insurance beyond coverage, or other compensation won't owe federal income tax on those payments — covering any federally declared wildfire going back to 2014