Title 26 — Internal Revenue CodeRelease 119-73

§123 Amounts received under insurance contracts for certain living expenses

Title 26 › Subtitle Subtitle A— - Income Taxes › Chapter CHAPTER 1— - NORMAL TAXES AND SURTAXES › Subchapter Subchapter B— - Computation of Taxable Income › Part PART III— - ITEMS SPECIFICALLY EXCLUDED FROM GROSS INCOME › § 123

Last updated Apr 6, 2026|Official source

Summary

Do not count as taxable income insurance money you get to pay living costs if your main home is damaged or destroyed by fire, storm, or a similar event, or if government officials keep you out of your home because of that danger. For any time period, the amount you don't have to count is limited to the extra living costs you actually had because you lost use of the home — that is, what you spent because of the loss minus what you would normally have spent.

Full Legal Text

Title 26, §123

Internal Revenue Code — Source: USLM XML via OLRC

(a)In the case of an individual whose principal residence is damaged or destroyed by fire, storm, or other casualty, or who is denied access to his principal residence by governmental authorities because of the occurrence or threat of occurrence of such a casualty, gross income does not include amounts received by such individual under an insurance contract which are paid to compensate or reimburse such individual for living expenses incurred for himself and members of his household resulting from the loss of use or occupancy of such residence.

(b)Subsection (a) shall apply to amounts received by the taxpayer for living expenses incurred during any period only to the extent the amounts received do not exceed the amount by which—

(1)the actual living expenses incurred during such period for himself and members of his household resulting from the loss of use or occupancy of their residence, exceed

(2)the normal living expenses which would have been incurred for himself and members of his household during such period.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

A prior section 123 was renumbered section 140 of this title.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 91–172, title IX, § 901(c), Dec. 30, 1969, 83 Stat. 709, provided that: “The

Amendments

made by this section [enacting this section] shall apply with respect to amounts received on or after January 1, 1969.”

Reference

Citations & Metadata

Citation

26 U.S.C. § 123

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73