Disaster victims to suffer additional losses from Republican tax bill

Tax deductions for personal losses from disasters to be eliminated.

Two cars are among the remains on Oct. 16, 2017, at a house that burned in a wildfire in Napa, California. CREDIT: AP Photo/Eric Risberg
Two cars are among the remains on Oct. 16, 2017, at a house that burned in a wildfire in Napa, California. CREDIT: AP Photo/Eric Risberg

From catastrophic hurricanes to an endless wildfire season, Americans endured huge personal and financial losses from natural disasters in 2017. Now, people who live in disaster-prone areas should be preparing for more turbulence, this time in the form of tax legislation that will make their ability to recover from future disaster even more difficult.

As they prepare to vote on the final tax bill, Senate Republicans are expected to follow their House colleagues who on Tuesday passed a sweeping tax bill containing a provision that will harm the ability of residents to put their lives back together after a disaster.

Disaster victims currently can deduct losses that are not insured and that amount to more than 10 percent of their incomes. Under the new tax plan, deductions for personal loss from natural disasters such as hurricanes and wildfires would be eliminated unless the event is a federally-declared disaster.

The House of Representatives voted 227 to 203 to pass the final version of the GOP Tax Cut and Jobs Act, which contained the provision removing the deduction. The Senate is expected to vote on the final bill Tuesday evening. Republicans contend the provision and others are necessary to generate more revenue to offset cuts elsewhere. Most economists anticipate the overall cuts, even with the elimination of certain deductions, will increase the national deficit by at least $1 trillion over the next 10 years.


The disaster tax provision will impact Americans in states from Texas to California, both of which experienced at least one natural disaster this year. Critics of the tax plan contend a natural disaster’s effect on taxes should not be dependent on a presidential declaration of a disaster.


The wildfires in California and Hurricane Harvey in Texas did receive federal emergency declarations, which would allow their victims to qualify for the deduction under the new tax bill. Most disasters, however, are not large enough to receive a presidential declaration, Mother Jones reported Tuesday.

Others point out that the provision is getting implemented at a time when the intensity of storms is increasing and wildfire seasons are lasting longer, both fueled by climate change.

“The number of extreme wealth events are increasing, supercharged as scientific research shows, by human-created climate change,” Chuck Collins, a tax policy expert and director of the Institute for Policy Studies’ Program on Inequality and the Common Good, said in an email to ThinkProgress. “This provision of the tax bill is out of sync with both Mother Nature and the growing need for families and communities to recover in a timely way from these natural disasters.”

In 2015, more than 72,000 people filed a casualty or theft deduction, leading to $1.6 billion in claims, according to the IRS date, Mother Jones noted in its report. The IRS lumps casualty and theft deductions together in its count.