President Donald Trump has signed legislation providing tax relief for individuals affected by qualifying major disasters and wildfires, including expanded casualty-loss deductions and an exclusion for certain wildfire compensation payments.
US President Donald Trump signed H.R. 5366, the Doug LaMalfa Federal Disaster Tax Relief Certainty Act, on 11 September 2026. The Senate and House both passed the measure with overwhelming bipartisan support.
The Doug LaMalfa Federal Disaster Tax Relief Certainty Act amends the US Internal Revenue Code to provide permanent-style tax relief for certain disaster and wildfire losses.
The law contains two main tax provisions for disaster victims.
According to the bill, individuals affected by major disasters declared by the President for incidents beginning between 28 December 2019 and 1 January 2027 may claim qualified net disaster losses, with the casualty-loss floor reduced to USD 100 and increased to USD 500 for qualifying disaster-related losses. The deduction will also be available to taxpayers who do not itemise deductions and will apply to tax years beginning after 31 December 2024.
In addition, the Act excludes qualified payments compensating individuals for losses, expenses, damages, injuries, or emotional distress caused by certain federally declared wildfires from gross income.
The wildfire relief applies to qualifying fires declared after 31 December 2014 and before 1 January 2027, for payments received in tax years beginning after 31 December 2025.
The Joint Committee on Taxation estimates the casualty loss provision will reduce federal revenue by USD 77 million across fiscal years 2026 through 2036. The wildfire exclusion will cost USD 331 million over the same period. Combined, the legislation reduces projected receipts by USD 408 million.
The House introduced H.R. 5366 on 15 September 2025 through a bipartisan group of lawmakers.
