Washington, D.C. (August 20, 2026) – The American Institute of CPAs (AICPA) has long-advocated for policies and legislation that would provide clear, permanent and consistent tax relief to individuals and businesses impacted by natural disaster across the country. Among the changes the AICPA has supported is newly passed legislation that provides “special rules” for casualty loss deductions attributed to qualified disasters occurring before January 1, 2027. The Doug LaMalfa Federal Disaster Tax Relief Certainty Act recently cleared a final hurdle, passing in the Senate with strong bipartisan support. The bill now awaits the President’s signature.
For qualified disasters after July 4, 2025, and before January 1, 2027, this bill would extend the special rules consistent with recent disaster relief legislation, which include waiving the 10% adjusted gross income limitation, allowing qualified disaster losses to be added to the standard deduction, and raising the deduction floor from $100 to $500. Unlike previous disaster tax relief bills, this bill is the first in many years to be prospective, where most are typically retroactive. The bill also introduces significant clarity by adding the disaster relief provisions to the Internal Revenue Code (IRC).
The legislation also extends the coverage period through the end of 2026 for the exclusion of qualified wildfire relief payments. The 2024 legislation enacting this disaster relief covered payments received between 2020 and 2025 and extended the period of limitation for refund claims; however, the limitations period extension was unnecessary in the bill because it extended the original disaster period by just one year.
“This legislation has a broader impact beyond closing the gap in disaster relief dating back to 2025. By codifying these provisions into the IRC, Congress is providing clarity to and ensuring consistency for taxpayers affected by federally declared disasters,” said Daniel Hauffe, Senior Manager for Tax Policy & Advocacy with the AICPA. “Although the bill ensures that disaster-related tax relief is readily findable and predictable, we urge Congress to pursue permanent relief to provide long-term certainty and avoid future gaps in relief for affected taxpayers.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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BACKGROUND:
March 3, 2025 – AICPA Submits Comment Letter Citing the Need for Permanent, Consistent, and Clear Disaster Relief Tax Legislation
Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com