Doug LaMalfa Federal Disaster Tax Relief Certainty Act

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.
• 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.
• 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.