The House Ways and Means Committee last week unanimously approved a bill (H.R. 5863) to provide additional tax relief for those affected by several recent disasters.
The legislation would expand the exclusion from income of disaster relief payments to include payments to compensate for losses, damages and expenses from federal disasters declared as a result of any forest or range file after Dec. 31, 2014, or resulting from the East Palestine, Ohio, train derailment on Feb. 3, 2023.
The bill would also extend the effective date of personal-casualty loss rules for disasters that were enacted as part of the Taxpayer Certainty and Disaster Tax Relief Act of 2020. The rules, which provide that qualified losses are deductible to the extent they exceed $500 without regard to whether they exceed 10% of adjusted gross income, no longer apply to disasters declared more than 60 days after its enactment. H.R. 5863 would extend the availability of the treatment to disasters declared 30 days after its own enactment.
The Ways and Means Committee vote clears the provisions for full possible House consideration, but the outlook for enactment is unclear. Disaster relief is commonly provided by Congress and is often bipartisan. Several lawmakers discussed adding the bill to a year-end spending deal, but it’s unclear whether any of the spending bills are realistic vehicles to carry tax provisions. The bill would also cost nearly $5 billion, which could create issue with the recent focus on deficits.
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