Federal Disaster Tax Relief Act | Who Qualifies and Benefits

January 26, 2026 by Kate Ferreira

Navigating Disaster Tax Relief: Distributions, Deadlines, and Deductions

Disasters—whether wildfires, hurricanes, floods, or earthquakes—can upend lives and finances in an instant. The IRS recognizes these challenges and provides a range of tax relief options for affected taxpayers. This blog explores general disaster distributions, extended filing dates, and the nuanced tax implications of property damage.
 

General Disaster Distributions: Accessing Retirement Funds in Times of Crisis

When a federally declared disaster strikes, affected individuals may need immediate access to funds. The SECURE 2.0 Act of 2022 introduced significant changes, allowing for ongoing disaster relief distributions from retirement plans and IRAs for disasters occurring on or after January 26, 2021.

Key Points: 

• Eligibility: If your principal residence is in a Federally Declared Disaster area (which is a major disaster area declared by the President) and you’ve sustained an economic loss (including displacement, property damage, or lost income), you may qualify for disaster relief distributions.  
• Distribution Limits: You can withdraw up to $22,000 from eligible retirement accounts. These distributions are exempt from the 10% early withdrawal penalty. 
• Repayment Options: You can spread the disaster distribution over three years. While you are not obligated to repay the distribution, you may repay it to a retirement plan or IRA within three years, treating it like a rollover. 
• Reporting: Qualified disaster distributions are reported on Form 8915-F. If repaid within the allowed period, the distribution is not taxable.  

This relief is designed to help taxpayers recover without facing additional tax penalties, and the IRS provides detailed FAQs and guidance for those considering such distributions.
 

Extended Filing Dates: Which Taxes Qualify?

Disaster declarations often trigger automatic extensions for filing and paying federal taxes. The IRS typically postpones deadlines for individuals and businesses in affected areas, as identified by FEMA.

What May Be Extended? 

• Individual Income Tax Returns: Normally due April 15, but disaster victims may have until October 15 or another specified date to file and pay. 
• Estimated Tax Payments: Quarterly payments due during the disaster period may be postponed. 
• Business Returns: Partnerships, S corporations, corporations, and fiduciaries may receive extensions for returns and payments. 
• Payroll and Excise Taxes: Quarterly returns and deposits may be postponed. 
• IRA and HSA Contributions: Deadlines for making contributions may also be extended.  

How to Qualify: 
If your IRS address of record is in a disaster area, relief is automatic. Others (e.g., those whose records are in the area, relief workers, or visitors injured/killed) must contact the IRS for relief.  

Important: 
Extensions to file do not extend the time to pay. Penalties and interest may still accrue if taxes aren’t paid by the postponed deadline.
 

Post-Disaster Tax Implications: Casualty Losses and Property Damage

Not all disaster damage is total destruction. Many taxpayers face peripheral damage—loss of value, water damage, or landslides. Here’s how the IRS treats these situations:
 

Casualty Loss Deductions

Definition: 
A casualty loss is a sudden, unexpected, or unusual event that damages property—such as fire, flood, or landslide. For tax years 2018–2025, personal casualty losses are deductible only if caused by a federally declared disaster (after 2025, some state-declared disasters may be included). 

What Qualifies? 

• Partial Damage: Losses from peripheral damage (e.g., water damage, landslides, smoke damage) may qualify if the event is sudden and attributable to a federally declared disaster.  
• Loss of Value: If your home’s value decreases due to disaster-related damage, you may deduct the lesser of the property’s adjusted basis or the decrease in fair market value, minus insurance reimbursements.  
• Limitations: The loss must be reduced by $100 per casualty and then by 10% of your adjusted gross income (AGI). For qualified disaster losses, the reduction is $500, and the 10% AGI rule does not apply (at the time of the publication of this blog, this special rule applies to disasters through September 2, 2025). 

Reporting: 
Use Form 4684, Casualties and Thefts, and include the FEMA disaster declaration number and the property’s zip code.

Special Note: 
Business casualty and theft losses remain deductible regardless of disaster status.
 

Examples of Deductible and Nondeductible Losses 

• Deductible: 
  • Home partially burned in a wildfire (federally declared disaster) 
  • Water damage from flooding due to a hurricane 
  • Landslides caused by saturated hillsides after a storm 
• Nondeductible: 
  • Gradual deterioration (e.g., termite damage, wear and tear) 
  • Losses covered by insurance (unless a timely claim is filed and not reimbursed)  

Additional Disaster Relief Tax Benefits

• Penalty Relief: The IRS may abate penalties for late filing or payment if you’re in a disaster area.  
• Record Reconstruction: The IRS provides resources for reconstructing lost records, which are essential for claiming casualty losses. 
• Leave-Sharing Plans: Employees can donate leave to colleagues affected by disasters without tax consequences.  

Final Thoughts

Disaster tax relief is complex but essential for recovery. If you’ve suffered property damage—whether total or partial—due to a federally declared disaster, you may qualify for extended deadlines, penalty relief, and casualty loss deductions. Always consult IRS.gov for the latest guidance and use the appropriate forms (Form 8915-F for retirement distributions, Form 4684 for casualty losses).

Helpful IRS Resources:

• Tax Relief in Disaster Situations
• Publication 547: Casualties, Disasters, and Thefts
• Form 8915-F: Qualified Disaster Retirement Plan Distributions
• Form 4684: Casualties and Thefts

If you have questions about your specific situation, you can call the IRS disaster hotline at 866-562-5227.