Hurricane Helene and Milton Tax Relief Act of 2025
Sponsored By: Representative Buchanan
Introduced
Summary
Targeted, temporary tax relief for people and organizations hit by Hurricanes Helene and Milton. This bill would let eligible residents use last year's earnings for the Earned Income Credit, expand disaster giving rules, and relax retirement account rules for storm losses.
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- Residents and households in Presidential major disaster areas who suffered economic loss during the incident period (September 28, 2024 to November 2, 2024) are defined as eligible for these special tax rules.
- Low- and moderate-income workers and families could elect to use the prior year's earned income when calculating the Earned Income Credit (EIC) for any tax year that includes part of the incident period. The election can be made on a joint return if either spouse is eligible and is limited to one taxable year.
- Donors and charities get expanded treatment for qualified hurricane disaster contributions. Individuals can carry excess disaster gifts forward for 5 years and get an above-the-line boost to the standard deduction for the disallowed portion. Corporations can deduct qualified contributions above normal limits up to the excess over 20 percent of taxable income. Contributions made after December 31, 2024 and by April 15, 2025 may be treated as paid in 2024.
- Retirement savers get flexible relief. The bill waives the early withdrawal penalty for qualified hurricane disaster distributions up to $100,000, lets recipients spread income over 3 years or repay distributions within 3 years, raises qualified plan loan limits to $100,000 for a temporary period, and allows delayed loan repayments and retroactive plan amendments.
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Bill Overview
Analyzed Economic Effects
6 provisions identified: 6 benefits, 0 costs, 0 mixed.
Bigger tax write-offs for hurricane donations
If enacted, cash gifts for Hurricane Helene or Milton relief from the start of the incident period through Dec 31, 2025 could get higher deduction limits. Individuals could deduct these gifts up to their contribution base after other gifts, and corporations up to 20% of taxable income after other gifts, with a five-year carryforward. Your standard deduction could rise by the extra amount allowed here. Gifts made by Apr 15, 2025 could be treated as paid on Dec 31, 2024. You must elect this, get written proof, and gifts to donor-advised funds and some supporting groups would not qualify.
Higher 401(k) loan limits and delays
If enacted, the max loan from a qualified employer plan would rise to $100,000 for loans made from enactment through June 30, 2025, and you could borrow up to your full vested balance. Loan payments due from Sept 28, 2024 through 180 days after Nov 2, 2024 would be delayed by one year or until Dec 31, 2025, with interest accruing and later payments adjusted. The delay time would not count toward the five-year loan limit.
Penalty-free retirement withdrawals after hurricanes
If enacted, you could take up to $100,000 in qualified hurricane disaster distributions without the 10% early-withdrawal penalty. You could spread the income over three years or repay the money within three years to undo the tax. This would apply to eligible distributions made on or after the incident start and before Dec 31, 2025. Special rules would let you repay home-purchase distributions taken 180 days before the incident through 30 days after, with repayments allowed through Dec 31, 2025.
Use last year income for EITC
If enacted, workers in hurricane disaster areas could choose to use last year’s earned income to figure the Earned Income Tax Credit for the tax year that includes Sept 28–Nov 2, 2024, if this year’s earnings are lower. You could make this choice for only one tax year. On a joint return, you could use it if either spouse qualifies, using both spouses’ prior-year earnings. The IRS would treat a mistake as a math error and fix it.
Extra time to amend retirement plans
If enacted, employers could update retirement plans after the relief rules take effect and treat changes as retroactive, if they ran the plan that way. Most plans would need to adopt changes by the last day of the first plan year starting on or after Jan 1, 2025. Government plans would get two extra years to adopt. This would help keep disaster relief in place for participants even if paperwork lags.
Who qualifies for hurricane tax relief
If enacted, you would qualify if your main home was in a President-declared disaster area for Helene or Milton at any time from Sept 28 to Nov 2, 2024 and you had an economic loss. The disaster declaration must be made before the bill is enacted. These rules would set who can use the bill’s tax and retirement relief.
Sponsors & CoSponsors
Sponsor
Buchanan
FL • R
Cosponsors
Edwards
NC • R
Sponsored 1/22/2025
Roll Call Votes
No roll call votes available for this bill.
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