Analyst Brief April 21, 2026

H.R. 5366 — Doug LaMalfa Federal Disaster Tax Relief Certainty Act, as amended

Current Status

Amendment in the Nature of a Substitute

Executive Summary

This amendment provides targeted, retroactive, and prospective tax relief for victims of major federally declared disasters and wildfires. It eliminates the 10% Adjusted Gross Income (AGI) threshold for deducting disaster casualty losses, allows taxpayers who take the standard deduction to claim these losses, and excludes compensation received for wildfire damages from gross income. Politically, this is a massive priority for Western members dealing with utility-caused wildfire settlements, ensuring constituents do not face surprise tax bills on their settlement payouts.

Bill Data

Primary Sponsor

Rep. Jason Smith (R-MO)

Bill Number

H.R. 5366 (ANS)

Session

119th

Co-Sponsors

None

Arguments For

  • Constituent Savior: Prevents victims of devastating wildfires (like the Camp Fire in CA) from being hit with massive federal tax bills on settlement money received from utility companies.
  • Broadens Relief Access: By allowing non-itemizers to claim disaster losses, it ensures lower- and middle-income taxpayers who take the standard deduction can actually benefit from the relief.
  • Bipartisan Appeal: Natural disasters affect both deep-red and deep-blue districts, making this an easy 'yes' vote that demonstrates Congress functioning to help Americans in crisis.

Likely Supporters

RepublicansDemocratsUtility Companies (e.g., PG&E)Disaster Relief Advocacy GroupsWestern State Delegations (CA, OR, WA)

Arguments Against

  • Revenue Hit: Retroactive tax exclusions and expanded deductions will score as a significant loss of federal revenue, which may draw opposition from strict deficit hawks if unoffset.
  • Administrative Burden: Retroactive application to 2014 (for wildfires) and 2019 (for other disasters) will require the IRS to process a wave of amended returns, potentially delaying refunds and straining agency resources.
  • Moral Hazard / Carve-outs: Critics may argue that creating specific, retroactive tax carve-outs for utility settlements sets a precedent that the federal tax code will subsidize state-level tort resolutions.

Likely Opponents

National Taxpayers Union (if unoffset)Committee for a Responsible Federal Budget

📋 Key Provisions

  • Waives the requirement that personal casualty losses must exceed 10% of a taxpayer's Adjusted Gross Income (AGI) to be deductible for qualified disasters.
  • Increases the per-casualty floor from $100 to $500 for qualified disaster-related personal casualty losses.
  • Allows taxpayers who do not itemize deductions to add their qualified net disaster loss to their standard deduction.
  • Excludes 'qualified wildfire relief payments' from gross income, covering compensation for property loss, additional living expenses, personal injury, and emotional distress.
  • Applies disaster relief to federally declared disasters between December 28, 2019, and January 1, 2027, and wildfire relief to fires declared between December 31, 2014, and January 1, 2027.
  • Prevents 'double-dipping' by denying tax deductions or basis increases for expenses covered by tax-exempt wildfire relief payments.
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Claim Analysis Page 2, Line 5

Waives the 10% AGI threshold for disaster losses.

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"10 percent of the adjusted gross income"

Claim Analysis Page 3, Line 12

Applies to disasters declared between late 2019 and 2027.

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"28, 2019, and before January 1, 2027."

Claim Analysis Page 4, Line 7

Allows non-itemizers to deduct disaster losses.

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"NOT ELECT TO ITEMIZE DEDUCTIONS"

Claim Analysis Page 5, Line 12

Excludes wildfire relief payments from gross income.

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"Gross income shall not include"

Claim Analysis Page 6, Line 7

Defines qualified wildfires retroactively to 2014.

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"declared after December 31, 2014,"