What is the Federal Disaster Tax Relief Act of 2023?

The Federal Disaster Tax Relief Act of 2023 became law on December 12, 2024. It provides assistance to taxpayers affected by federally declared disasters, such as hurricanes, wildfires, and the East Palestine, Ohio train derailment.

If you received qualified wildfire relief payments between January 1, 2020, and December 31, 2026, you don't have to pay taxes on that income. If you've already paid taxes on this income, you can amend your return to remove the income and receive a refund. Even if the three-year amendment window would normally be closed for you, it's reopened for one year from the date the bill was signed into law.  

Payments made as a result of the East Palestine train derailment in 2023 are now considered qualified disaster relief payments. This means they're not taxable. If you reported taxable payments in 2023, you can amend your 2023 return and exclude the payment. ‌If you received payments in 2024, and you also received a 1099-MISC or 1099-G, follow these instructions to exclude the payment from your income. 

The Taxpayer Certainty and Disaster Tax Relief Act of 2020 is partially back in effect. This means that the 10% deductible for casualty losses that occurred between January 1, 2020, and February 10, 2025, has been suspended. You can now claim a casualty loss without itemizing your other deductions. For losses that occurred between 2020 and 2023, you'll need to amend your prior return to claim the loss under the new rules. For losses that occurred in 2024, TurboTax and the IRS aren't currently ready to accept returns that follow the new rules.