Disaster Survivors Tax Relief and Recovery Act
Sponsored By: Representative Chu, Judy [D-CA-28]
Introduced
Summary
Disaster survivors tax relief creates temporary tax rules to help people and communities hit by qualifying 2025 disasters by easing earned-income credit rules, expanding disaster-related retirement access, and loosening some charitable and housing rules to speed recovery.
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- Families and displaced workers can elect to use prior-year earned income when computing the earned income tax credit for the 2025 first taxable year if their earned income fell because of a qualified disaster. They can also take up to $100,000 of qualified disaster distributions from retirement plans without the 10 percent early withdrawal tax and repay those withdrawals over a three-year window.
- Charitable donors and relief organizations get looser limits for cash gifts made for 2025 disaster relief, require a written acknowledgment and an election to apply the rule, exclude donor-advised funds, and raise the food-inventory contribution limit from 15% to 25% for 2025.
- States and affordable housing developers get extra low-income housing credit capacity for calendar years 2026 and 2027 for buildings in qualified disaster zones and longer placed-in-service deadlines to finish projects in affected areas.
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Bill Overview
Analyzed Economic Effects
6 provisions identified: 6 benefits, 0 costs, 0 mixed.
Bigger tax breaks for disaster donations
If enacted, cash gifts you make for disaster relief from Jan 1, 2025 through 60 days after enactment would be ignored when applying the usual percentage limits on charitable deductions. You would need contemporaneous written proof of use for relief and must elect this treatment. Donations to donor-advised funds and certain supporting organizations would not qualify. Also, donations of food inventory in 2025 would use a 25% limit instead of 15%, and partnerships and S corporations must make the election at the entity level.
Bigger tax relief for disaster losses
If enacted, your qualified disaster-related personal casualty losses in the incident period would be treated as a "net disaster loss" after a $500 floor. The net disaster loss would increase your standard deduction by that amount for the tax year the loss occurs. That increase would not be reduced by a related code offset that otherwise can apply.
More retirement access after disasters
If enacted, you would be able to take up to $100,000 from eligible retirement plans as a penalty-free qualified disaster distribution for covered disasters. You would be able to repay those amounts to a plan or IRA within three years, and taxed income could be spread over three years unless you opt out. For 180 days after enactment, plan loans could go up to $100,000 and to your full nonforfeitable accrued benefit. Loan payments due during the incident period through 180 days after its end would be delayed one year (or until 180 days after enactment), with interest and term adjustments. Plan sponsors could adopt retroactive amendments through the first plan year starting on or after Jan 1, 2027 (two years for government plans) if the plan was actually run that way.
Use prior-year income for credits
If enacted, a qualified individual displaced by a covered disaster whose earned income falls in 2025 could elect to use the prior year's earned income to figure the Earned Income Tax Credit and Child Tax Credit for their first tax year beginning in 2025. The rule applies on joint returns if either spouse is a qualified individual. You must make the election.
Higher cap for low-income housing tax credits
If enacted, States would get extra low-income housing tax credit capacity in 2026 and 2027 for projects in qualified disaster zones. The 2026 increase could not exceed $8.25 times the State population used for 2025, and the 2027 increase would be limited by that amount reduced by 2026's increase. For designated 2026 and 2027 allocations, the deadline to place buildings in service would be extended by substituting a third calendar year for the second and lengthening a related 1-year rule to 2 years.
Wildfire payouts stay tax-free longer
If enacted, compensation you receive for losses from certain wildfires would remain excluded from gross income through 2036 instead of ending in 2026. The change would take effect on enactment.
Sponsors & CoSponsors
Sponsor
Chu, Judy [D-CA-28]
CA • D
Cosponsors
Rep. Brownley, Julia [D-CA-26]
CA • D
Sponsored 12/18/2025
Rep. Carbajal, Salud O. [D-CA-24]
CA • D
Sponsored 12/18/2025
Costa
CA • D
Sponsored 12/18/2025
Rep. DeSaulnier, Mark [D-CA-10]
CA • D
Sponsored 12/18/2025
Friedman
CA • D
Sponsored 12/18/2025
Rep. Garamendi, John [D-CA-8]
CA • D
Sponsored 12/18/2025
Rep. Garcia, Robert [D-CA-42]
CA • D
Sponsored 12/18/2025
Rep. Jacobs, Sara [D-CA-51]
CA • D
Sponsored 12/18/2025
Rep. Kamlager-Dove, Sydney [D-CA-37]
CA • D
Sponsored 12/18/2025
Levin
CA • D
Sponsored 12/18/2025
Liccardo
CA • D
Sponsored 12/18/2025
Rep. Lieu, Ted [D-CA-36]
CA • D
Sponsored 12/18/2025
Lofgren
CA • D
Sponsored 12/18/2025
Rep. Matsui, Doris O. [D-CA-7]
CA • D
Sponsored 12/18/2025
Rep. Sherman, Brad [D-CA-32]
CA • D
Sponsored 12/18/2025
Thompson (CA)
CA • D
Sponsored 12/18/2025
Pelosi
CA • D
Sponsored 12/18/2025
Aguilar
CA • D
Sponsored 12/18/2025
Barragan
CA • D
Sponsored 12/18/2025
Rep. Min, Dave [D-CA-47]
CA • D
Sponsored 12/18/2025
Mullin
CA • D
Sponsored 12/18/2025
Rep. Panetta, Jimmy [D-CA-19]
CA • D
Sponsored 12/18/2025
Peters
CA • D
Sponsored 12/18/2025
Rep. Rivas, Luz M. [D-CA-29]
CA • D
Sponsored 12/18/2025
Rep. Ruiz, Raul [D-CA-25]
CA • D
Sponsored 12/18/2025
Rep. Sánchez, Linda T. [D-CA-38]
CA • D
Sponsored 12/18/2025
Swalwell
CA • D
Sponsored 12/18/2025
Rep. Takano, Mark [D-CA-39]
CA • D
Sponsored 12/18/2025
Rep. Tran, Derek [D-CA-45]
CA • D
Sponsored 12/18/2025
Rep. Whitesides, George [D-CA-27]
CA • D
Sponsored 12/18/2025
Cisneros
CA • D
Sponsored 2/5/2026
Roll Call Votes
No roll call votes available for this bill.
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