The Internal Revenue Service has outlined tax relief measures available to individuals affected by federally declared disasters, including tornadoes, wildfires, and other calamities occurring through 2026. These provisions, recently extended by legislation signed into law on September 11, 2026, offer important tax deductions for uninsured personal casualty losses.

Under the new law, individuals may deduct personal property losses that are not covered by insurance when those losses result from federally declared disasters impacting a wide geographic area. The deductible amount is based on the lesser of the property's adjusted basis or its decrease in value, minus any insurance reimbursements received or expected. This relief applies to disasters occurring before January 1, 2027, and was extended via a bill passed by the Senate prior to its August recess.

Significantly, the legislation permits taxpayers to bypass the usual limitation that reduces casualty loss deductions by 10% of adjusted gross income, allowing deductions exceeding a $500 threshold regardless of income levels. This benefit is available to both taxpayers who itemize deductions on Schedule A and those who claim the standard deduction. The IRS refers to these as “qualified disaster losses.”

Taxpayers also retain flexibility in the timing of claiming these losses. Homeowners damaged by a disaster in 2026, for example, may choose to claim the loss on either their 2026 or their 2025 tax returns. If a return for the prior year has already been filed, an amended return can be submitted using Form 1040-X. The deadline to file such amended returns is six months after the regular filing deadline for the loss year, meaning for 2026 disaster losses, the amended 2025 return must be filed by October 15, 2027.

To assist with calculating deductible losses, the IRS has established several safe harbors. Homeowners reporting casualty losses of $20,000 or less can elect to use the lower estimate from two repair cost assessments to determine the decline in home value. Additionally, the IRS provides a valuation table to estimate replacement costs for personal belongings lost or damaged in a qualified disaster. Taxpayers can find further guidance in IRS Publication 547 and IRS Revenue Procedure 2018-08.

For those who have lost prior-year tax documents due to disaster damage, the IRS recommends obtaining tax transcripts, which summarize key return information. These transcripts can be accessed online through an IRS individual account, requested via the automated phone line, or by mailing Form 4506-T. While full copies of prior tax returns can be requested using Form 4506, this process typically takes longer than obtaining a transcript.

These measures aim to ease the financial burden on disaster victims by providing clear guidance and options for reporting losses on tax returns. Taxpayers affected by recent or ongoing disasters are encouraged to review the IRS resources and consult tax professionals to ensure proper documentation and maximize available relief.