I 
119TH CONGRESS 
1ST SESSION H. R. 5366 
To amend the Internal Revenue Code of 1986 to codify and extend the 
rules for personal casualty losses arising from major disasters and the 
rules for the exclusion from gross income of compensation for losses 
or damages resulting from certain wildfires. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 15, 2025 
Mr. STEUBE (for himself, Mr. THOMPSON of California, Mr. LAMALFA, and 
Mr. PANETTA) introduced the following bill; which was referred to the 
Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to codify 
and extend the rules for personal casualty losses arising 
from major disasters and the rules for the exclusion 
from gross income of compensation for losses or damages 
resulting from certain wildfires. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Federal Disaster Tax 
Relief Act of 2025’’. 
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SEC. 2. CODIFICATION AND EXTENSION OF RULES FOR 
CASUALTY LOSSES ARISING FROM MAJOR 
DISASTERS. 
(a) TREATMENT OF LOSSES.— 
(1) IN GENERAL.—Section 165(h) of the Inter-
nal Revenue Code of 1986 is amended by adding at 
the end the following new paragraph: 
‘‘(6) SPECIAL RULE FOR QUALIFIED DISASTER 
LOSSES.— 
‘‘(A) IN GENERAL.—If an individual has a 
qualified net disaster loss for any taxable year, 
the 
amount 
determined 
under 
paragraph 
(2)(A)(ii) shall be the sum of— 
‘‘(i) such net disaster loss, and 
‘‘(ii) so much of the excess referred to 
in the matter preceding clause (i) of para-
graph (2)(A) (reduced by the amount in 
clause (i) of this subparagraph) as exceeds 
10 percent of the adjusted gross income of 
the individual. 
‘‘(B) QUALIFIED NET DISASTER LOSS.— 
For purposes of subparagraph (A), the term 
‘qualified net disaster loss’ means the excess of 
qualified 
disaster-related 
personal 
casualty 
losses over personal casualty gains. 
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‘‘(C) QUALIFIED DISASTER-RELATED PER-
SONAL CASUALTY LOSSES.— 
‘‘(i) IN
GENERAL.—For purposes of 
this subsection, the term ‘qualified dis-
aster-related 
personal 
casualty 
losses’ 
means losses described in subsection (c)(3) 
(determined after application of paragraph 
(1)) which arise in a qualified disaster area 
on or after the first day of the incident pe-
riod of the qualified disaster to which such 
area relates, and which are attributable to 
such disaster. 
‘‘(ii) QUALIFIED
DISASTER
AREA.— 
The term ‘qualified disaster area’ means 
any area with respect to which a major 
disaster has been declared by the President 
under section 401 of the Robert T. Staf-
ford Disaster Relief and Emergency Assist-
ance Act if the incident period of the dis-
aster with respect to which such declara-
tion is made begins after July 4, 2025, 
and before January 1, 2027. 
‘‘(iii) 
QUALIFIED
DISASTER.—The 
term ‘qualified disaster’ means, with re-
spect to any qualified disaster area, the 
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disaster by reason of which a major dis-
aster was declared with respect to such 
area. 
‘‘(iv) INCIDENT
PERIOD.—For pur-
poses of this paragraph, the term ‘incident 
period’ means, with respect to any quali-
fied disaster, the period specified by the 
Federal Emergency Management Agency 
as the period during which such disaster 
occurred.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
165(h)(5)(B)(ii) of such Code is amended by insert-
ing ‘‘or (6)’’ after ‘‘paragraph (2)(A)’’. 
(b) DOLLAR LIMITATION.—Section 165(h)(1) of the 
Internal Revenue Code of 1986 is amended by striking 
‘‘$500 ($100 for taxable years beginning after December 
31, 2009)’’ and inserting ‘‘$100 ($500 in the case of any 
net disaster loss to which paragraph (3) applies)’’. 
(c) STANDARD DEDUCTION.— 
(1) IN GENERAL.—Section 63(c)(1) of the In-
ternal Revenue Code of 1986 is amended by striking 
‘‘and’’ at the end of subparagraph (A), by striking 
the period at the end of subparagraph (B) and in-
serting ‘‘and’’, and by adding at the end the fol-
lowing new subparagraph: 
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‘‘(C) the disaster loss deduction.’’. 
(2) DISASTER LOSS DEDUCTION.—Section 63(c) 
of such Code is amended by adding at the end the 
following new paragraph: 
‘‘(8) DISASTER
LOSS
DEDUCTION.—For the 
purposes of paragraph (1), the term ‘disaster loss 
deduction’ means the excess of qualified net disaster 
losses (as defined in section 165(h)(6)(B)) over the 
amount of personal casualty gains (as defined in sec-
tion 165(h)(3)(A)) reduced by any portion of such 
gains 
taken 
into 
account 
under 
section 
165(h)(5)(B)(i).’’. 
(d) TREATMENT UNDER ALTERNATIVE MINIMUM 
TAX.—Section 56(b)(1)(D) of the Internal Revenue Code 
of 1986 is amended by inserting ‘‘(other than the disaster 
loss deduction)’’ after ‘‘section 63(c)’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to losses incurred in taxable years 
beginning after December 31, 2024. 
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SEC. 3. CODIFICATION AND EXTENSION OF EXCLUSION 
FROM GROSS INCOME OF COMPENSATION 
FOR LOSSES OR DAMAGES RESULTING FROM 
CERTAIN WILDFIRES. 
(a) IN GENERAL.—Part III of subchapter B of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by inserting before section 140 the following new section: 
‘‘SEC. 139M. COMPENSATION FOR LOSSES OR DAMAGES RE-
SULTING FROM CERTAIN WILDFIRES. 
‘‘(a) IN GENERAL.—Gross income shall not include 
any amount received by an individual as a qualified wild-
fire relief payment. 
‘‘(b) DEFINITIONS; QUALIFIED WILDFIRE RELIEF 
PAYMENT.—For purposes of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified wildfire 
relief payment’ means any amount received by or on 
behalf of an individual as compensation for losses, 
expenses, or damages (including compensation for 
additional living expenses, lost wages (other than 
compensation for lost wages paid by the employer 
which would have otherwise paid such wages), per-
sonal injury, death, or emotional distress) incurred 
as a result of a qualified wildfire disaster, but only 
to the extent the losses, expenses, or damages com-
pensated by such payment are not compensated for 
by insurance or otherwise. 
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‘‘(2) QUALIFIED
WILDFIRE
DISASTER.—The 
term ‘qualified wildfire disaster’ means any Feder-
ally declared disaster (as defined in section 
165(i)(5)(A)) after December 31, 2014, as a result 
of any forest or range fire. 
‘‘(c) DENIAL
OF
DOUBLE
BENEFIT.—Notwith-
standing any other provision of this title— 
‘‘(1) no deduction or credit shall be allowed (to 
the person for whose benefit a qualified wildfire re-
lief payment is made) for, or by reason of, any ex-
penditure to the extent of the amount excluded 
under this section with respect to such expenditure, 
and 
‘‘(2) no increase in the basis or adjusted basis 
of any property shall result from any amount ex-
cluded under this section with respect to such prop-
erty. 
‘‘(d) LIMITATION
ON APPLICATION.—This section 
shall only apply to qualified wildfire relief payments re-
ceived by the individual during taxable years beginning 
after December 31, 2025, and before January 1, 2031.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for part III of subchapter B of chapter 1 of such Code 
is amended by inserting before the item related to section 
140 the following new item: 
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‘‘Sec. 139M. Compensation for losses or damages resulting from certain 
wildfires.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to payments received in taxable 
years beginning after December 31, 2025. 
Æ 
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