Disaster Survivors Tax Relief and Recovery Act

In the case of a qualified individual, if the earned income of a taxpayer for the taxpayer’s first taxable year beginning in 2025 is less than the earned income of the taxpayer for the preceding taxable year, the credits allowed under sections 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election of the taxpayer, be determined by substituting—

(1) such earned income for the preceding taxable year, for

(2) such earned income for the taxpayer’s first taxable year beginning in 2025.

For purposes of this section, the term qualified individual means any individual whose principal place of abode at any time during the incident period of any qualified disaster was located—

(1) in the qualified disaster zone with respect to such qualified disaster, or

(2) in the qualified disaster area with respect to such qualified disaster (but outside the qualified disaster zone with respect to such qualified disaster) and such individual was displaced from such principal place of abode by reason of such qualified disaster.

For purposes of this section, the term earned income has the meaning given such term in section 32(c) of such Code.

For purposes of subsection (a), in the case of a joint return for the taxpayer’s first taxable year beginning in 2025—

(A) such subsection shall apply if either spouse is a qualified individual, and

(B) the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year.

For purposes of section 6213 of such Code, an incorrect use on a return of earned income pursuant to subsection (a) shall be treated as a mathematical or clerical error.

Except as otherwise provided in this section, the Internal Revenue Code of 1986 shall be applied without regard to any substitution under subsection (a).

Except as otherwise provided in paragraph (2), qualified disaster relief contributions shall be disregarded in applying subsections (b) and (d) of section 170 of the Internal Revenue Code of 1986.

For purposes of section 170 of such Code—

In the case of an individual—

Any qualified disaster relief contribution shall be allowed as a deduction only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s contribution base (as defined in section 170(b)(1)(H) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code.

If the aggregate amount of qualified disaster relief contributions made in the contribution year (within the meaning of section 170(d)(1) of such Code) exceeds the limitation of clause (i), such excess shall be added to the excess described in section 170(b)(1)(G)(ii).

In the case of a corporation—

Any qualified disaster relief contribution shall be allowed as a deduction only to the extent that the aggregate of such contributions does not exceed the excess of 100 percent of the taxpayer’s taxable income (as determined under section 170(b)(2) of such Code) over the amount of all other charitable contributions allowed under such section.

If the aggregate amount of qualified disaster relief contributions made in the contribution year (within the meaning of section 170(d)(2) of such Code) exceeds the limitation of clause (i), such excess shall be appropriately taken into account under section 170(d)(2), subject to the limitations thereof.

For purposes of this subsection, the term qualified disaster relief contribution means any charitable contribution (as defined in section 170(c) of such Code) if—

(i) such contribution—

(I) is paid in cash to an organization described in section 170(b)(1)(A) of such Code during the period beginning on January 1, 2025, and ending on the date which is 60 days after the date of the enactment of this Act, and

(II) is made for relief efforts in one or more qualified disaster areas,

(ii) the taxpayer obtains from such organization contemporaneous written acknowledgment (within the meaning of section 170(f)(8) of such Code) that such contribution was used (or is to be used) for relief efforts described in clause (i)(II), and

(iii) the taxpayer has elected the application of this subsection with respect to such contribution.

Such term shall not include a contribution by a donor if the contribution is—

(i) to an organization described in section 509(a)(3) of such Code, or

(ii) for the establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2) of such Code).

In the case of a partnership or S corporation, the election under subparagraph (A)(iii) shall be made separately by each partner or shareholder.

In the case of any charitable contribution of food during 2025 to which section 170(e)(3)(C) of such Code applies, subclauses (I) and (II) of clause (ii) thereof shall each be applied by substituting 25 percent for 15 percent.

This section shall apply to contributions made on or after January 1, 2025.

Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified disaster distribution.

For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified disaster distributions for any taxable year shall not exceed the excess (if any) of—

(i) $100,000, over

(ii) the aggregate amounts treated as qualified disaster distributions received by such individual for all prior taxable years.

If a distribution to an individual would (without regard to subparagraph (A)) be a qualified disaster distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified disaster distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000.

For purposes of subparagraph (B), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of such Code.

The limitation of subparagraph (A) shall be applied separately with respect to distributions made with respect to each qualified disaster.

Any individual who receives a qualified disaster distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such Code, as the case may be.

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified disaster distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified disaster distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified disaster distribution from an individual retirement plan, then, to the extent of the amount of the contribution, the qualified disaster distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution.

For purposes of this subsection—

Except as provided in paragraph (2), the term qualified disaster distribution means any distribution from an eligible retirement plan made—

(i) on or after the first day of the incident period of a qualified disaster and before the date which is 180 days after the date of the enactment of this Act, and

(ii) to an individual whose principal place of abode at any time during the incident period of such qualified disaster is located in the qualified disaster area with respect to such qualified disaster and who has sustained an economic loss by reason of such qualified disaster.

The term eligible retirement plan shall have the meaning given such term by section 402(c)(8)(B) of such Code.

The term individual retirement plan shall have the meaning given such term by section 7701(a)(37) of such Code.

In the case of any qualified disaster distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year.

For purposes of subparagraph (A), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of such Code shall apply.

For purposes of sections 401(a)(31), 402(f), and 3405 of such Code, qualified disaster distributions shall not be treated as eligible rollover distributions.

For purposes of the Internal Revenue Code of 1986, a qualified disaster distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) of such Code and section 8433(h)(1) of title 5, United States Code, and, in the case of a money purchase pension plan, a qualified disaster distribution which is an in-service withdrawal shall be treated as meeting the distribution rules of section 401(a) of the Internal Revenue Code of 1986.

Any individual who received a qualified distribution may, during the applicable period, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of such Code) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of such Code, as the case may be.

Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection.

For purposes of this subsection, the term qualified distribution means any distribution—

(A) described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(i)(V), 403(b)(11)(B), or 72(t)(2)(F) of such Code,

(B) which was to be used to purchase or construct a principal residence in a qualified disaster area, but which was not so used on account of the qualified disaster with respect to such area, and

(C) which was received during the period beginning on the date which is 180 days before the first day of the incident period of such qualified disaster and ending on the date which is 30 days after the last day of such incident period.

For purposes of this subsection, the term applicable period means, in the case of a principal residence in a qualified disaster area with respect to any qualified disaster, the period beginning on the first day of the incident period of such qualified disaster and ending on the date which is 180 days after the date of the enactment of this Act.

In the case of any loan from a qualified employer plan (as defined under section 72(p)(4) of such Code) to a qualified individual made during the 180-day period beginning on the date of the enactment of this Act—

(A) clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting $100,000 for $50,000, and

(B) clause (ii) of such section shall be applied by substituting the present value of the nonforfeitable accrued benefit of the employee under the plan for one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan.

In the case of a qualified individual (with respect to any qualified disaster) with an outstanding loan (on or after the first day of the incident period of such qualified disaster) from a qualified employer plan (as defined in section 72(p)(4) of such Code)—

(A) if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning on the first day of the incident period of such qualified disaster and ending on the date which is 180 days after the last day of such incident period, such due date shall be delayed for one year (or, if later, until the date which is 180 days after the date of the enactment of this Act),

(B) any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under subparagraph (A) and any interest accruing during such delay, and

(C) in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in subparagraph (A) of this paragraph shall not be disregarded.

For purposes of this subsection, the term qualified individual means any individual—

(A) whose principal place of abode at any time during the incident period of any qualified disaster is located in the qualified disaster area with respect to such qualified disaster, and

(B) who has sustained an economic loss by reason of such qualified disaster.

If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i).

This subsection shall apply to any amendment to any plan or annuity contract which is made—

(i) pursuant to any provision of this section, or pursuant to any regulation issued by the Secretary of the Treasury (or his delegate) or the Secretary of Labor under any provision of this section, and

(ii) on or before the last day of the first plan year beginning on or after January 1, 2027, or such later date as the Secretary may prescribe.

In the case of a governmental plan (as defined in section 414(d) of such Code), clause (ii) shall be applied by substituting the date which is two years after the date otherwise applied under clause (ii).

This subsection shall not apply to any amendment unless—

(i) during the period—

(I) beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and

(II) ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted),

(i) the plan or contract is operated as if such plan or contract amendment were in effect, and

(ii) such plan or contract amendment applies retroactively for such period.

If an individual has a net disaster loss for any taxable year—

(1) the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of—

(A) such net disaster loss, and

(B) so much of the excess referred to in the matter preceding clause (i) of section 165(h)(2)(A) of such Code (reduced by the amount in subparagraph (A)) as exceeds 10 percent of the adjusted gross income of the individual,

(2) in the case of qualified disaster-related personal casualty losses, section 165(h)(1) of such Code shall be applied to by substituting $500 for $500 ($100 for taxable years beginning after December 31, 2009),

(3) the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss, and

(4) section 56(b)(1)(E) of such Code shall not apply to so much of the standard deduction as is attributable to the increase under paragraph (3).

For purposes of this section, the term net disaster loss means the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in section 165(h)(3)(A) of such Code).

For purposes of this section, the term qualified disaster-related personal casualty losses means losses described in section 165(c)(3) of such Code 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 qualified disaster.

For purposes of section 42 of the Internal Revenue Code of 1986, the State housing credit ceiling for any State for each of calendar years 2026 and 2027 shall be increased by the aggregate housing credit dollar amount allocated by the State housing credit agencies of such State for such calendar year to buildings located in any qualified disaster zone in such State.

The increase determined under subsection (a) with respect to any State shall not exceed—

(A) in the case of any such increase determined for calendar year 2026, the applicable dollar limitation for such State, and

(B) in the case of any such increase determined for calendar year 2027, the applicable dollar limitation for such State reduced by the amount of any increase determined under subsection (a) with respect to such State for calendar year 2026.

For purposes of this subsection, the term applicable dollar limitation means, with respect to any State, the product of $8.25 multiplied by the population of such State (as determined for calendar year 2025).

In the case of any housing credit dollar amount which is allocated by a State housing credit agency of a State for calendar year 2026 or 2027 to a building located in a qualified disaster zone in such State and which is designated (at such time and in such manner as the Secretary may provide) by such State housing credit agency as housing credit dollar amount to which this subsection applies, section 42(h)(1)(E) of such Code shall be applied—

(A) by substituting third calendar year for second calendar year each place it appears, and

(B) by substituting 2 years for 1 year in clause (ii) thereof.

The aggregate amount of housing credit dollar amount designated under paragraph (1) for any calendar year by all State housing credit agencies of a State shall not exceed the amount determined under subsection (b)(1) with respect to such State for such calendar year.

For purposes of determining the unused State housing credit ceiling for any calendar year under section 42(h)(3)(C) of such Code, any increase in the State housing credit ceiling under subsection (a) shall be treated as an amount described in clause (ii) of such section.

The term qualified disaster area means any area with respect to which a major disaster was declared, during the period beginning on January 1, 2025, and ending on the date which is 60 days after the date of the enactment of this Act, 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 was made begins on or after December 28, 2024, and on or before the date of the enactment of this Act.

The term qualified disaster zone means that portion of any qualified disaster area which was determined by the President, during the period beginning on January 1, 2025, and ending on the date which is 60 days after the date of the enactment of this Act, to warrant individual or individual and public assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of the qualified disaster with respect to such disaster area.

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.

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, except that for purposes of this Act, such period shall not be treated as ending after the date which is 30 days after the date of the enactment of this Act.