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House passes disaster tax relief legislation

On Sept. 29, the full House passed H.R. 3823, the Disaster Tax Relief and Airport and Airway Extension Act of 2017, and President Trump signed it into law.

According to the House Ways and Means Committee website, the legislation takes the following targeted actions to help American families and communities affected by Hurricanes Harvey, Irma and Maria:

Deduction for personal casualty losses
  • With respect to uncompensated losses arising in the disaster area, eliminates the current law requirements that personal casualty losses must exceed 10 percent of Adjusted Gross Income to qualify for deduction
  • Eliminates the current law requirement that taxpayers must itemize deductions to access this tax relief
Penalty-free access to retirement funds
  • Provides an exception to the 10 percent early retirement plan withdrawal penalty for qualified hurricane relief distributions
  • Allows for the re-contribution of retirement plan withdrawals for home purchases cancelled due to eligible disasters
  • Provides flexibility for loans from retirement plans for qualified hurricane relief
Encouraging charitable giving
  • Temporarily suspends limitations on the deduction for charitable contributions associated with qualified hurricane relief made before Dec. 31, 2017
Disaster-related employment relief
  • Provides a tax credit for 40 percent of wages (up to $6,000 per employee) paid by a disaster-affected employer to an employee from a core disaster area
Special rule for determining 2017 Earned Income Tax Credit and Child Tax Credit
  • For 2017, allows taxpayers to refer to earned income from the immediately preceding year for purposes of determining the Earned Income Tax Credit and Child Tax Credit
The legislation also has temporary extensions of health programs within Ways and Means jurisdiction; this includes extending the Intravenous Immunoglobulin (IVIG) demonstration policy for three years to ensure this program can continue to operate and provide care to patients with severe immunodeficiency diseases. The IVIG demonstration otherwise would stop providing services to patients after Sept. 30, 2017.


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