If enacted, SB2236 would significantly impact individuals affected by federally declared disasters by granting them more leeway to claim deductions for their losses. This bill is intended to help taxpayers recover more financially by acknowledging the unpredictable nature of personal disasters. Without the limitation imposed by previous legislation, individuals will have the opportunity to deduct the full amount of casualty losses against their taxable income, which could lead to higher refunds for those affected by such events.
Summary
Senate Bill 2236, also known as the Casualty Loss Deduction Restoration Act, proposes to amend the Internal Revenue Code of 1986 by repealing the temporary limitation on personal casualty losses. This bill aims to restore greater tax relief for individuals experiencing personal losses due to events such as natural disasters, simplifying the process of claiming deductions for these losses. Previously, taxpayers could only claim up to $50,000 for losses incurred during certain taxable years from 2018 to 2025; SB2236 seeks to eliminate that cap, allowing for more comprehensive deductions relevant to personal casualty losses.
Contention
Nonetheless, the bill is not free from contention. Some legislators may voice concerns regarding the potential fiscal implications of removing the cap on casualty losses, particularly in the context of budget constraints. There is also an ongoing debate about whether it is prudent to tie tax policy directly to disaster relief, with critics arguing that it could encourage dependency on federal aid rather than promoting long-term recovery strategies. Supporters, however, counter that the bill provides essential support for individuals in desperate need during difficult recovery times.
Protecting Homeowners from Disaster Act of 2023 This bill repeals the current limitation on tax deductions for personal casualty losses. Under current law, such losses are deductible in taxable years 2018-2025 only to the extent that they are attributable to a federally declared disaster.
Protecting Homeowners from Disaster Act of 2025 This bill repeals the limit on the itemized tax deduction for unreimbursed personal casualty losses. Specifically, the bill repeals a provision that generally limits the deduction for tax years 2018-2025 to losses that are attributable to a federally declared disaster. The bill applies to losses sustained after 2024.
To amend the Internal Revenue Code of 1986 to allow certain credits and deductions to be taken as a refundable tax credit by Puerto Rico businesses or residents, and to extend such credits and deductions to possessions of the United States.