Federal Disaster Tax Relief Act passes Senate

The bipartisan Federal Disaster Tax Relief Act has passed the Senate by unanimous consent and now heads to the White House for President Donald Trump’s signature. The bill, championed by Senator Ron Wyden, aims to provide relief to natural disaster survivors, specifically those affected by wildfires since 2016.

The legislation allows survivors to deduct uninsured or uncovered property losses from their federal income taxes. Crucially, it makes disaster settlement payments non-taxable, including portions covering legal fees, living expenses, lost wages, or compensation for injury, death, or emotional distress. This provision is particularly significant for victims of man-made disasters, such as those caused by powerline failures.

The bill passed in the final hours before the Congressional recess, overcoming a procedural attempt to stall the measure by Senator Ted Cruz. The act effectively renews a 2024 law that had expired at the end of 2025.