119-s2744

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 2744 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 2744

 To amend the Internal Revenue Code of 1986 to codify and extend the 
rules for personal casualty losses arising from major disasters and the 
rules for the exclusion from gross income of compensation for losses or 
 damages resulting from certain wildfires.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 September 9, 2025

 Mr. Scott of Florida introduced the following bill; which was read 
 twice and referred to the Committee on Finance

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to codify and extend the 
rules for personal casualty losses arising from major disasters and the 
rules for the exclusion from gross income of compensation for losses or 
 damages resulting from certain wildfires.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Federal Disaster Tax Relief Act of 
2025''.

SEC. 2. CODIFICATION AND EXTENSION OF RULES FOR CASUALTY LOSSES ARISING 
 FROM MAJOR DISASTERS.

    (a) Treatment of Losses.--

    (1) In general.--

Section 165

    (h) of the Internal Revenue 
 Code of 1986 is amended by adding at the end the following new 
 paragraph:
 ``

    (6) Special rule for qualified disaster losses.--
 ``
        (A) In general.--If an individual has a qualified 
 net disaster loss for any taxable year, the amount 
 determined under paragraph

    (2)
        (A)
            (ii) shall be the sum 
 of--
 ``
            (i) such net disaster loss, and
 ``
            (ii) so much of the excess referred to in 
 the matter preceding clause
            (i) of paragraph

    (2)
        (A) (reduced by the amount in clause
            (i) of 
 this subparagraph) as exceeds 10 percent of the 
 adjusted gross income of the individual.
 ``
        (B) Qualified net disaster loss.--For purposes of 
 subparagraph
        (A) , the term `qualified net disaster 
 loss' means the excess of qualified disaster-related 
 personal casualty losses over personal casualty gains.
 ``
            (C) Qualified disaster-related personal casualty 
 losses.--
 ``
            (i) In general.--For purposes of this 
 subsection, the term `qualified disaster-
 related personal casualty losses' means losses 
 described in subsection
            (c) (3) (determined 
 after application of paragraph

    (1) ) which arise 
 in a qualified disaster area on or after the 
 first day of the incident period of the 
 qualified disaster to which such area relates, 
 and which are attributable to such disaster.
 ``
            (ii) Qualified disaster area.--The term 
 `qualified disaster area' means any area with 
 respect to which a major disaster has been 
 declared by the President under 

section 401 of 
 the Robert T. Stafford Disaster Relief and 
 Emergency Assistance Act if the incident period 
 of the disaster with respect to which such 
 declaration is made begins after July 4, 2025, 
 and before January 1, 2027.
 ``
            (iii) Qualified disaster.--The term 
 `qualified disaster' means, with respect to any 
 qualified disaster area, the disaster by reason 
 of which a major disaster was declared with 
 respect to such area.
 ``
            (iv) Incident period.--For purposes of 
 this paragraph, the term `incident period' 
 means, with respect to any qualified disaster, 
 the period specified by the Federal Emergency 
 Management Agency as the period during which 
 such disaster occurred.''.

    (2) Conforming amendment.--

Section 165

    (h)

    (5)
        (B)
            (ii) of such 
 Code is amended by inserting ``or

    (6) '' after ``paragraph

    (2)
        (A) ''.

    (b) Dollar Limitation.--

Section 165

    (h)

    (1) of the Internal Revenue 
Code of 1986 is amended by striking ``$500 ($100 for taxable years 
beginning after December 31, 2009)'' and inserting ``$100 ($500 in the 
case of any net disaster loss to which paragraph

    (3) applies)''.
            (c) Standard Deduction.--

    (1) In general.--

Section 63
            (c) (1) of the Internal Revenue 
 Code of 1986 is amended by striking ``and'' at the end of 
 subparagraph
        (A) , by striking the period at the end of 
 subparagraph
        (B) and inserting ``and'', and by adding at the 
 end the following new subparagraph:
 ``
            (C) the disaster loss deduction.''.

    (2) Disaster loss deduction.--

Section 63
            (c) of such Code is 
 amended by adding at the end the following new paragraph:
 ``

    (8) Disaster loss deduction.--For the purposes of 
 paragraph

    (1) , the term `disaster loss deduction' means the 
 excess of qualified net disaster losses (as defined in 

section 165

    (h)

    (6)
        (B) ) over the amount of personal casualty gains (as 
 defined in 

section 165

    (h)

    (3)
        (A) ) reduced by any portion of such 
 gains taken into account under 

section 165

    (h)

    (5)
        (B)
            (i) .''.
            (d) Treatment Under Alternative Minimum Tax.--

Section 56

    (b)

    (1)
            (D) of the Internal Revenue Code of 1986 is amended by inserting ``(other 
than the disaster loss deduction)'' after ``

section 63
            (c) ''.

    (e) Effective Date.--The amendments made by this section shall 
apply to losses incurred in taxable years beginning after December 31, 
2024.

SEC. 3. CODIFICATION AND EXTENSION OF EXCLUSION FROM GROSS INCOME OF 
 COMPENSATION FOR LOSSES OR DAMAGES RESULTING FROM CERTAIN 
 WILDFIRES.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting before 

section 140 the following new section:

``

SEC. 139M. COMPENSATION FOR LOSSES OR DAMAGES RESULTING FROM CERTAIN 
 WILDFIRES.

 ``

    (a) In General.--Gross income shall not include any amount 
received by an individual as a qualified wildfire relief payment.
 ``

    (b) Definitions; Qualified Wildfire Relief Payment.--For purposes 
of this section--
 ``

    (1) In general.--The term `qualified wildfire relief 
 payment' means any amount received by or on behalf of an 
 individual as compensation for losses, expenses, or damages 
 (including compensation for additional living expenses, lost 
 wages (other than compensation for lost wages paid by the 
 employer which would have otherwise paid such wages), personal 
 injury, death, or emotional distress) incurred as a result of a 
 qualified wildfire disaster, but only to the extent the losses, 
 expenses, or damages compensated by such payment are not 
 compensated for by insurance or otherwise.
 ``

    (2) Qualified wildfire disaster.--The term `qualified 
 wildfire disaster' means any Federally declared disaster (as 
 defined in 

section 165
            (i) (5)
        (A) ) after December 31, 2014, as a 
 result of any forest or range fire.
 ``
            (c) Denial of Double Benefit.--Notwithstanding any other 
provision of this title--
 ``

    (1) no deduction or credit shall be allowed (to the 
 person for whose benefit a qualified wildfire relief payment is 
 made) for, or by reason of, any expenditure to the extent of 
 the amount excluded under this section with respect to such 
 expenditure, and
 ``

    (2) no increase in the basis or adjusted basis of any 
 property shall result from any amount excluded under this 
 section with respect to such property.
 ``
            (d) Limitation on Application.--This section shall only apply to 
qualified wildfire relief payments received by the individual during 
taxable years beginning after December 31, 2025, and before January 1, 
2031.''.

    (b) Clerical Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of such Code is amended by inserting before 
the item related to 

section 140 the following new item:

``

Sec. 139M. Compensation for losses or damages resulting from certain 
 wildfires.''.
            (c) Effective Date.--The amendments made by this section shall 
apply to payments received in taxable years beginning after December 
31, 2025.
 <all>