Federal Disaster Tax Relief Act of 2025
Sponsored By: Senator Scott, Rick [R-FL]
Introduced
Summary
This bill creates federal tax relief for people hit by major disasters and wildfires by codifying a special casualty loss rule for disaster losses and excluding certain wildfire relief payments from taxable income.
Show full summary
- Households in declared disaster areas get a new "qualified disaster loss" rule that blends net disaster losses with an adjusted gross income (AGI) floor to set allowable casualty losses and adds a disaster-specific deduction tied to the standard deduction. It applies to losses in taxable years beginning after December 31, 2024.
- Individuals who receive qualifying wildfire relief payments can exclude those payments from gross income, subject to anti-double-dipping rules that prevent taking deductions or basis increases for the same excluded amount. That exclusion applies to payments received in taxable years after December 31, 2025 and before January 1, 2031.
- The bill preserves the disaster deduction when calculating the alternative minimum tax (AMT). It also defines "qualified disaster area," "incident period," and ties incident periods to Presidentially declared major disasters under the Stafford Act using FEMA timing. Enhanced loss treatment is limited to disasters declared after July 4, 2025 and before January 1, 2027.
Your PRIA Score
Personalized for You
How does this bill affect your finances?
Sign up for a PRIA Policy Scan to see your personalized alignment score for this bill and every other piece of legislation we track. We analyze your financial profile against policy provisions to show you exactly what matters to your wallet.
Bill Overview
Analyzed Economic Effects
2 provisions identified: 2 benefits, 0 costs, 0 mixed.
More disaster loss tax relief
If enacted, you would be able to deduct more personal casualty losses from qualifying major disasters. The bill would create a new disaster loss deduction equal to your qualified net disaster losses minus personal casualty gains. For losses in qualifying disaster areas, the allowed loss could also include any excess above 10% of your adjusted gross income. Per-event floors would be $100 normally and $500 for net disaster losses. These rules would apply to losses in tax years beginning after December 31, 2024. The special area rule would only cover FEMA incident periods starting after July 4, 2025 and before January 1, 2027. The bill would also exclude this disaster deduction from the AMT cross-reference.
Wildfire relief payments tax-free
If enacted, you would be able to exclude certain wildfire relief payments from your taxable income. The exclusion would cover compensation for losses, additional living expenses, some lost wages, injury, death, and emotional distress. It would apply only to amounts not paid by insurance or other reimbursement. The exclusion would apply to payments received in tax years starting after December 31, 2025 and before January 1, 2031. You could not also take a deduction or increase property basis for amounts that are excluded.
Sponsors & CoSponsors
Sponsor
Scott, Rick [R-FL]
FL • R
Cosponsors
Sen. Schiff, Adam B. [D-CA]
CA • D
Sponsored 9/15/2025
Sen. Moody, Ashley [R-FL]
FL • R
Sponsored 5/11/2026
Sen. Padilla, Alex [D-CA]
CA • D
Sponsored 5/12/2026
Sen. Cassidy, Bill [R-LA]
LA • R
Sponsored 5/12/2026
Roll Call Votes
No roll call votes available for this bill.
View on Congress.gov