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Congress·In Committee·2 months ago

House Committee Reviews Bill to Expand Tax Relief, Retirement Access for 2025 Disaster Survivors

Also known as: Disaster Survivors Tax Relief and Recovery Act

Legislative Progress

✓ Filed
Review
House
Senate
President

Impacts

Positive Impacts(6)
Child Tax Credit
Helps

Disaster survivors can use their higher 2024 income to qualify for the Child Tax Credit, so they don't lose benefits due to lost wages.

Earned Income Credit
Helps

Survivors can use prior-year earnings to calculate the EITC, protecting their credit even if disaster caused income to drop.

Retiree
Helps

Disaster survivors can withdraw up to $100,000 from retirement accounts penalty-free and spread the tax bill over three years.

Homeowner
Helps

Homeowners in disaster zones get expanded casualty loss deductions and can claim property damage on their standard deduction.

Housing Assistance
Helps

Extra low-income housing tax credits are allocated for disaster zones in 2026-2027, helping rebuild affordable housing.

Small Business Owner
Helps

Businesses can deduct up to 100% of taxable income for qualified disaster relief charitable contributions, up from normal limits.

State Impacts

CaliforniaCA
Positive

Bill was introduced by California representatives responding to 2025 wildfires; California disaster zones would benefit most from these tax relief provisions.

Key Points

  • This bill, introduced by Ms. Chu, helps people living in areas hit by major disasters in 2025. It allows survivors who lost work to use their 2024 income levels to qualify for the Child Tax Credit and Earned Income Tax Credit, ensuring they don't lose these benefits because of a temporary drop in pay.
  • Survivors can withdraw up to $100,000 from their retirement accounts, like a 401(k) or IRA, without paying the usual 10% early withdrawal penalty. They are also given three years to pay the income taxes on that money or put the money back into their retirement fund to avoid taxes entirely.
  • The policy makes it easier to deduct property damage from taxes. It allows people to claim disaster-related losses as part of their standard deduction, meaning they can get a tax break for repairs and lost belongings even if they do not normally list every individual deduction on their tax forms.
  • To help rebuild communities, the bill increases the amount of tax credits available for building low-income housing in disaster zones during 2026 and 2027. It also encourages more help by removing the normal limits on how much cash people and businesses can donate to disaster relief charities.
  • The bill extends a special rule for wildfire victims, ensuring that any money they receive as compensation for losses or damages from certain wildfires remains tax-free through the year 2036.
TaxesHousingEconomy

Milestones

2 milestones2 actions
Dec 18, 2025House

Referred to the House Committee on Ways and Means.

Dec 18, 2025

Introduced in House

What Happens Next

Projected impacts based on AI analysis

Tax relief provisions take effect for 2025 tax year

Disaster survivors could use these new deductions and credits when filing their 2025 tax returns, likely in early 2026.

short_term

Additional low-income housing tax credits become available for disaster zones

States can allocate extra housing credits to rebuild affordable housing in disaster areas during 2026 and 2027.

Penalty-free retirement withdrawals available for up to 180 days after enactment

Disaster survivors have a limited window to pull money from retirement accounts without the usual 10% early withdrawal penalty.

Related News

3 articles
Pasadena Now·about 2 months ago

Congresswoman Chu Renews Push for Eaton Fire Disaster Aid

Rep. Judy Chu introduced H.R. 6842, the Disaster Survivors Tax Relief and Recovery Act, to address critical gaps in the federal tax code for survivors of the Eaton Fire and other major disasters. The bill allows survivors to use 2024 income for tax credits and withdraw $100,000 from 401(k) plans.

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Local News Pasadena·about 2 months ago

On the Fire Anniversary, Chu and Friedman Push Congress to Deliver Lifesaving Relief

Rep. Chu introduced the Disaster Survivors Tax Relief and Recovery Act to codify tax provisions of Governor Newsom's disaster request. The act ensures wildfire settlements are not taxed and allows survivors to claim disaster-related losses without standard income limitations.

CL=
Quiver Quantitative·about 2 months ago

Rep. Judy Chu Commemorates One Year Anniversary of Eaton Fire and Advocates for Disaster Aid

Rep. Chu has proposed a bill aimed at providing tax relief to fire survivors. The Disaster Survivors Tax Relief and Recovery Act would allow survivors to use their 2024 income for the Child Tax Credit and Earned Income Tax Credit if it is lower than their 2025 income.

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Source Information

Document Type

Congressional Bill

Official Title

Disaster Survivors Tax Relief and Recovery Act

Bill NumberHR 6842
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

Cosponsors

(31)
D: 31

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.