Us Congress 2023-2024 Regular Session

Us Congress House Bill HB5873

Introduced
10/2/23  

Caption

Natural Disaster Tax Relief Act of 2023

Impact

The proposed legislation introduces special rules for retirement fund withdrawals, exempting qualified disaster distributions from certain penalties typically imposed under existing tax laws. This change is aimed at facilitating access to funds for individuals facing financial distress due to disaster-related damages. Moreover, the bill establishes guidelines for the repayment of these distributions over an extended period, allowing individuals affected by qualifying disasters to manage their financial recovery more effectively. Under this framework, affected individuals may also utilize funds originally designated for home purchases towards recovery efforts without incurring penalties.

Summary

House Bill 5873, titled the 'Natural Disaster Tax Relief Act of 2023', aims to provide significant tax relief and supportive measures for individuals affected by natural disasters declared in the year 2023. The bill focuses specifically on enabling favorable tax treatment for withdrawals from retirement accounts and addressing personal casualty losses for those impacted by various major disasters throughout the year. By allowing for greater financial flexibility in times of crisis, the bill seeks to mitigate the economic hardships faced by affected individuals and families.

Contention

Although the bill has garnered support for its beneficial provisions aimed at aiding victims of natural disasters, it also raises concerns among some lawmakers about the long-term implications of loosening restrictions on retirement withdrawals. Critics argue that such measures could encourage premature depletion of retirement savings, which may undermine long-term financial security for individuals. Further provisions within the bill that allow for the treatment of certain disaster-related losses could also generate debate on how disaster assistance is structured and the responsibilities of government in these instances.

Companion Bills

US SB3043

Same As Natural Disaster Tax Relief Act of 2023

Similar Bills

US HB9081

Storm Recovery and Community Restoration Act

US HB955

HOPE Act of 2025 Health Out-of-Pocket Expense Act of 2025

US HB5688

Bipartisan HSA Improvement Act of 2023

US SB5296

READY Accounts Act

US HB440

READY Accounts ActThis bill establishes a new Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) account, allows individuals to make tax-deductible contributions of up to $4,500 per year to such accounts (adjusted annually for inflation), and allows individuals to take tax-free distributions from such accounts to pay for qualified home disaster mitigation and recovery expenses related to a principal residence owned by the taxpayer.Under the bill, qualified home disaster mitigation expenses include expenses certified by a qualified industry professional as meeting criteria to mitigate damage from a natural or other disaster, includinginstalling a roofing underlayment to sheathing, impact-resistant windows, impact-resistant entry doors, or ground anchors;replacing a roof covering;applying a foam adhesive to reinforce the roof structure;strengthening the connection of the roof deck to roof framing, roof-to-wall connections, soffits, or attic ventilation openings;elevating a residence; orachieving the current building code standard.Qualified home disaster recovery expenses include costs for repairing damage to a residence resulting from fire, storm, or other casualty (provided such costs are not reimbursed).Distributions from a READY account used for anything other than qualified home disaster mitigation and recovery expenses must be included in gross income and are subject to a 20% penalty. (Some exceptions apply.)Finally, the bill imposes a 6% tax on contributions in excess of the annual limit. (Some exceptions apply.) 

US HB5673

Responsible Legislating Act

US HB5

Responsible Legislating Act

US SB5633

A bill to establish Medicare flex fund accounts and for other purposes.