Disaster Relief Tax Benefits Extended Under OBBBA

When disaster strikes, financial recovery can feel overwhelming. Thankfully, the One Big, Beautiful Bill Act (OBBBA) has extended key disaster relief tax provisions to provide continued support for taxpayers impacted by federally and state-declared disasters. Here’s what you need to know.

Extended Disaster Relief for Qualified Losses

The disaster relief provisions originally introduced in 2020 and later extended in 2023 are now expanded again under OBBBA. These provisions apply to disasters that meet certain timing requirements between January 1, 2020 and August 3, 2025.

For casualty losses related to eligible disasters during this period:

• The 10% AGI floor on casualty losses does not apply.

• The per-casualty limit increases from $100 to $500.

• You can claim the personal casualty loss deduction even if you use the standard deduction.

This makes it easier for taxpayers to claim relief without needing to itemize.

Disasters Now Eligible for Relief

As a result of OBBBA, additional disasters have been added to the relief list, ensuring victims previously excluded (such as the Los Angeles wildfires) are now covered.

The following federally declared disasters are included:

• Arkansas severe storms (DR-4865-AR)

• Los Angeles wildfires (DR-4856-CA)

• Kentucky tornadoes and severe storms (DR-4875-KY; DR-4864-KY)

• Missouri severe storms (DR-4867-MO; DR-4877-MO)

• Mississippi severe storms (DR-4874-MS)

• Oklahoma wildfires (DR-4866-OK)

• Tennessee severe storms (DR-4878-TN)

• Texas severe storms (DR-4871-TX; DR-4879-TX – if the incident period ends by August 3, 2025)

• Virginia severe storms (DR-4863-VA)

• West Virginia severe storms (DR-4861-WV)

If you or your family were impacted by one of these disasters, special tax relief may be available to you.

State-Declared Disasters (Starting 2026)

For the first time, beginning in 2026, taxpayers will be able to claim casualty losses from state-declared disasters—not just federally declared ones.

A state-declared disaster is defined as a natural catastrophe (such as hurricanes, tornadoes, earthquakes, fires, floods, landslides, snowstorms, or droughts) that both:

• The Governor (or DC Mayor) declares as severe, and

• The Secretary of the Treasury agrees is significant enough for relief.

This expansion ensures more taxpayers have access to financial relief after natural disasters that may not have received a federal declaration.

Why This Matters

These changes mean:

• More disasters qualify for relief.

• Taxpayers have an easier path to deductions, even without itemizing.

• Starting in 2026, state-level disasters will also count, broadening eligibility.

Contact 2 Cherry Tax today to discuss your eligibility for disaster relief deductions contact@2cherrytax.com