Thompson Announces Introduction of Disaster Tax Relief Act of 2021 Legislation offers comprehensive disaster relief through the tax code

Thompson Announces Introduction of Disaster Tax Relief Act of 2021 Legislation offers comprehensive disaster relief through the tax code

PRESS RELEASE

Washington – Today Rep. Mike Thompson (CA-05), Chairman of the House Ways and Means Subcommittee on Select Revenue Measures, announced the introduction of the Disaster Tax Relief Act of 2021. This bill uses the tax code to offer relief to survivors of natural disasters and includes several pieces of disaster relief legislation he has previously introduced. A statement from Thompson is below.

“As our district continues to recover from the recent devastating fires and prepares for another Fire Season, it’s critical the Federal government provide every resource possible to recover and mitigate the impact of future disasters. That’s why I’m proud to introduce the Disaster Tax Relief Act of 2021, comprehensive legislation that uses the tax code to help people and small businesses impacted by natural disasters, such as fires. Not only does it ease the tax burden for and give financial flexibility to disaster survivors, the bill incentivizes investment in disaster resiliency projects for both individuals and small businesses. It’s critical we pass this bill right away so that fire survivors don’t have to wait any longer.”

You can click here to read more about H.R. 3954, the Disaster Tax Relief Act of 2021. The bill includes:

Disaster Tax Relief in Sections 1-6, which:

  • Allows qualified individuals in federally declared disaster areas to withdraw up to $100,000 from tax-exempt retirement plans with no tax penalty,
  • Increases to $100,000 the limit on loans from retirement plans not treated as distributions for individuals in federally declared disaster areas,
  • Creates an employee retention tax credit for employers affected by disaster, up to 40 percent of qualified wages for each employee,
  • Expands eligibility for disaster-related personal casualty losses, and
  • Suspends the limit on corporate charitable contributions for disaster relief programs

Tax Incentives for Catastrophe Mitigation in Sections 7 and 8, which:

  • Stipulates that payments made under a qualified state- or locality-based catastrophe mitigation program do not qualify as income for federal income tax purposes, and
  • Exempts from federal income tax calculations payments made under emergency agricultural programs, including the Wildfires and Hurricane Indemnity Program (WHIP), the Livestock Indemnity Program, the Tree Assistance Program, and the Non-insured Crop Disaster Assistance Program.

Expanded Support for Disaster Affected Small Businesses in Sections 9-11, which:

  • Provides relief funding for small businesses by authorizing the Small Business Administration (SBA) to exceed the $100,000 cap on grants to small business development centers in disaster areas, and
  • Authorizes SBA and the Farm Service Agency to issue loans to enterprises deemed vital to disaster recovery

Tax Credit for Qualified Wildfire Mitigation Expenditures in Section 12, which:

  • Provides a tax credit equal to 30 percent of qualified expenditures to individuals and businesses who participate in a qualified state-based wildfire resiliency program, such as the California Forest Improvement Program
  • This is meant to encourage individuals to participate in wildfire resiliency programs while stretching further the state budget for those programs