H.R. 6842

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6842 Introduced in House (IH)]

<DOC>

119th CONGRESS
1st Session
H. R. 6842

To provide tax relief with respect to certain Federal disasters, and 
for other purposes.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

December 18, 2025

Ms. Chu (for herself, Mr. Sherman, Mr. Thompson of California, Ms. 
Pelosi, Mr. Aguilar, Ms. Barragan, Ms. Brownley, Mr. Carbajal, Mr. 
Costa, Mr. DeSaulnier, Ms. Friedman, Mr. Garamendi, Mr. Garcia of 
California, Ms. Jacobs, Ms. Kamlager-Dove, Mr. Levin, Mr. Liccardo, Mr. 
Lieu, Ms. Lofgren, Ms. Matsui, Mr. Min, Mr. Mullin, Mr. Panetta, Mr. 
Peters, Ms. Rivas, Mr. Ruiz, Ms. Sanchez, Mr. Swalwell, Mr. Takano, Mr. 
Tran, and Mr. Whitesides) introduced the following bill; which was 
referred to the Committee on Ways and Means

_______________________________________________________________________

A BILL

To provide tax relief with respect to certain Federal disasters, and 
for other purposes.

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ``Disaster Survivors Tax Relief and 
Recovery Act''.

SEC. 2. TEMPORARY SPECIAL RULE FOR DETERMINATION OF EARNED INCOME.

(a) In General.--In the case of a qualified individual, if the 
earned income of a taxpayer for the taxpayer's first taxable year 
beginning in 2025 is less than the earned income of the taxpayer for 
the preceding taxable year, the credits allowed under sections 24(d) 
and 32 of the Internal Revenue Code of 1986 may, at the election of the 
taxpayer, be determined by substituting--
(1) such earned income for the preceding taxable year, for
(2) such earned income for the taxpayer's first taxable 
year beginning in 2025.
(b) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means any individual whose principal place of 
abode at any time during the incident period of any qualified disaster 
was located--
(1) in the qualified disaster zone with respect to such 
qualified disaster, or
(2) in the qualified disaster area with respect to such 
qualified disaster (but outside the qualified disaster zone 
with respect to such qualified disaster) and such individual 
was displaced from such principal place of abode by reason of 
such qualified disaster.
(c) Earned Income.--For purposes of this section, the term ``earned 
income'' has the meaning given such term in section 32(c) of such Code.
(d) Special Rules.--
(1) Application to joint returns.--For purposes of 
subsection (a), in the case of a joint return for the 
taxpayer's first taxable year beginning in 2025--
(A) such subsection shall apply if either spouse is 
a qualified individual, and
(B) the earned income of the taxpayer for the 
preceding taxable year shall be the sum of the earned 
income of each spouse for such preceding taxable year.
(2) Errors treated as mathematical or clerical error.--For 
purposes of section 6213 of such Code, an incorrect use on a 
return of earned income pursuant to subsection (a) shall be 
treated as a mathematical or clerical error.
(3) No effect on determination of gross income, etc.--
Except as otherwise provided in this section, the Internal 
Revenue Code of 1986 shall be applied without regard to any 
substitution under subsection (a).

SEC. 3. TEMPORARY MODIFICATION OF LIMITATIONS ON CERTAIN CHARITABLE 
CONTRIBUTIONS.

(a) Temporary Suspension of Limitations on Certain Cash 
Contributions.--
(1) In general.--Except as otherwise provided in paragraph 
(2), qualified disaster relief contributions shall be 
disregarded in applying subsections (b) and (d) of section 170 
of the Internal Revenue Code of 1986.
(2) Treatment of excess contributions.--For purposes of 
section 170 of such Code--
(A) Individuals.--In the case of an individual--
(i) Limitation.--Any qualified disaster 
relief contribution shall be allowed as a 
deduction only to the extent that the aggregate 
of such contributions does not exceed the 
excess of the taxpayer's contribution base (as 
defined in section 170(b)(1)(H) of such Code) 
over the amount of all other charitable 
contributions allowed under section 170(b)(1) 
of such Code.
(ii) Carryover.--If the aggregate amount of 
qualified disaster relief contributions made in 
the contribution year (within the meaning of 
section 170(d)(1) of such Code) exceeds the 
limitation of clause (i), such excess shall be 
added to the excess described in section 
170(b)(1)(G)(ii).
(B) Corporations.--In the case of a corporation--
(i) Limitation.--Any qualified disaster 
relief contribution shall be allowed as a 
deduction only to the extent that the aggregate 
of such contributions does not exceed the 
excess of 100 percent of the taxpayer's taxable 
income (as determined under section 170(b)(2) 
of such Code) over the amount of all other 
charitable contributions allowed under such 
section.
(ii) Carryover.--If the aggregate amount of 
qualified disaster relief contributions made in 
the contribution year (within the meaning of 
section 170(d)(2) of such Code) exceeds the 
limitation of clause (i), such excess shall be 
appropriately taken into account under section 
170(d)(2), subject to the limitations thereof.
(3) Qualified disaster relief contribution.--
(A) In general.--For purposes of this subsection, 
the term ``qualified disaster relief contribution'' 
means any charitable contribution (as defined in 
section 170(c) of such Code) if--
(i) such contribution--
(I) is paid in cash to an 
organization described in section 
170(b)(1)(A) of such Code during the 
period beginning on January 1, 2025, 
and ending on the date which is 60 days 
after the date of the enactment of this 
Act, and
(II) is made for relief efforts in 
one or more qualified disaster areas,
(ii) the taxpayer obtains from such 
organization contemporaneous written 
acknowledgment (within the meaning of section 
170(f)(8) of such Code) that such contribution 
was used (or is to be used) for relief efforts 
described in clause (i)(II), and
(iii) the taxpayer has elected the 
application of this subsection with respect to 
such contribution.
(B) Exception.--Such term shall not include a 
contribution by a donor if the contribution is--
(i) to an organization described in section 
509(a)(3) of such Code, or
(ii) for the establishment of a new, or 
maintenance of an existing, donor advised fund 
(as defined in section 4966(d)(2) of such 
Code).
(C) Application of election to partnerships and s 
corporations.--In the case of a partnership or S 
corporation, the election under subparagraph (A)(iii) 
shall be made separately by each partner or 
shareholder.
(b) Increase in Limits on Contributions of Food Inventory.--In the 
case of any charitable contribution of food during 2025 to which 
section 170(e)(3)(C) of such Code applies, subclauses (I) and (II) of 
clause (ii) thereof shall each be applied by substituting ``25 
percent'' for ``15 percent''.
(c) Effective Date.--This section shall apply to contributions made 
on or after January 1, 2025.

SEC. 4. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.

(a) Tax-Favored Withdrawals From Retirement Plans.--
(1) In general.--Section 72(t) of the Internal Revenue Code 
of 1986 shall not apply to any qualified disaster distribution.
(2) Aggregate dollar limitation.--
(A) In general.--For purposes of this subsection, 
the aggregate amount of distributions received by an 
individual which may be treated as qualified disaster 
distributions for any taxable year shall not exceed the 
excess (if any) of--
(i) $100,000, over
(ii) the aggregate amounts treated as 
qualified disaster distributions received by 
such individual for all prior taxable years.
(B) Treatment of plan distributions.--If a 
distribution to an individual would (without regard to 
subparagraph (A)) be a qualified disaster distribution, 
a plan shall not be treated as violating any 
requirement of the Internal Revenue Code of 1986 merely 
because the plan treats such distribution as a 
qualified disaster distribution, unless the aggregate 
amount of such distributions from all plans maintained 
by the employer (and any member of any controlled group 
which includes the employer) to such individual exceeds 
$100,000.
(C) Controlled group.--For purposes of subparagraph 
(B), the term ``controlled group'' means any group 
treated as a single employer under subsection (b), (c), 
(m), or (o) of section 414 of such Code.
(D) Special rule for individuals affected by more 
than one disaster.--The limitation of subparagraph (A) 
shall be applied separately with respect to 
distributions made with respect to each qualified 
disaster.
(3) Amount distributed may be repaid.--
(A) In general.--Any individual who receives a 
qualified disaster distribution may, at any time during 
the 3-year period beginning on the day after the date 
on which such distribution was received, make one or 
more contributions in an aggregate amount not to exceed 
the amount of such distribution to an eligible 
retirement plan of which such individual is a 
beneficiary and to which a rollover contribution of 
such distribution could be made under section 402(c), 
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of such 
Code, as the case may be.
(B) Treatment of repayments of distributions from 
eligible retirement plans other than iras.--For 
purposes of the Internal Revenue Code of 1986, if a 
contribution is made pursuant to subparagraph (A) with 
respect to a qualified disaster distribution from an 
eligible retirement plan other than an individual 
retirement plan, then the taxpayer shall, to the extent 
of the amount of the contribution, be treated as having 
received the qualified disaster distribution in an 
eligible rollover distribution (as defined in section 
402(c)(4) of such Code) and as having transferred the 
amount to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days of the 
distribution.
(C) Treatment of repayments of distributions from 
iras.--For purposes of the Internal Revenue Code of 
1986, if a contribution is made pursuant to 
subparagraph (A) with respect to a qualified disaster 
distribution from an individual retirement plan, then, 
to the extent of the amount of the contribution, the 
qualified disaster distribution shall be treated as a 
distribution described in section 408(d)(3) of such 
Code and as having been transferred to the eligible 
retirement plan in a direct trustee to trustee transfer 
within 60 days of the distribution.
(4) Definitions.--For purposes of this subsection--
(A) Qualified disaster distribution.--Except as 
provided in paragraph (2), the term ``qualified 
disaster distribution'' means any distribution from an 
eligible retirement plan made--
(i) on or after the first day of the 
incident period of a qualified disaster and 
before the date which is 180 days after the 
date of the enactment of this Act, and
(ii) to an individual whose principal place 
of abode at any time during the incident period 
of such qualified disaster is located in the 
qualified disaster area with respect to such 
qualified disaster and who has sustained an 
economic loss by reason of such qualified 
disaster.
(B) Eligible retirement plan.--The term ``eligible 
retirement plan'' shall have the meaning given such 
term by section 402(c)(8)(B) of such Code.
(C) Individual retirement plan.--The term 
``individual retirement plan'' shall have the meaning 
given such term by section 7701(a)(37) of such Code.
(5) Income inclusion spread over 3-year period.--
(A) In general.--In the case of any qualified 
disaster distribution, unless the taxpayer elects not 
to have this paragraph apply for any taxable year, any 
amount required to be included in gross income for such 
taxable year shall be so included ratably over the 3-
taxable-year period beginning with such taxable year.
(B) Special rule.--For purposes of subparagraph 
(A), rules similar to the rules of subparagraph (E) of 
section 408A(d)(3) of such Code shall apply.
(6) Special rules.--
(A) Exemption of distributions from trustee to 
trustee transfer and withholding rules.--For purposes 
of sections 401(a)(31), 402(f), and 3405 of such Code, 
qualified disaster distributions shall not be treated 
as eligible rollover distributions.
(B) Qualified disaster distributions treated as 
meeting plan distribution requirements.--For purposes 
of the Internal Revenue Code of 1986, a qualified 
disaster distribution shall be treated as meeting the 
requirements of sections 401(k)(2)(B)(i), 
403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) of such 
Code and section 8433(h)(1) of title 5, United States 
Code, and, in the case of a money purchase pension 
plan, a qualified disaster distribution which is an in-
service withdrawal shall be treated as meeting the 
distribution rules of section 401(a) of the Internal 
Revenue Code of 1986.
(b) Recontributions of Withdrawals for Home Purchases.--
(1) Recontributions.--
(A) In general.--Any individual who received a 
qualified distribution may, during the applicable 
period, make one or more contributions in an aggregate 
amount not to exceed the amount of such qualified 
distribution to an eligible retirement plan (as defined 
in section 402(c)(8)(B) of such Code) of which such 
individual is a beneficiary and to which a rollover 
contribution of such distribution could be made under 
section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of 
such Code, as the case may be.
(B) Treatment of repayments.--Rules similar to the 
rules of subparagraphs (B) and (C) of subsection (a)(3) 
shall apply for purposes of this subsection.
(2) Qualified distribution.--For purposes of this 
subsection, the term ``qualified distribution'' means any 
distribution--
(A) described in section 401(k)(2)(B)(i)(IV), 
403(b)(7)(A)(i)(V), 403(b)(11)(B), or 72(t)(2)(F) of 
such Code,
(B) which was to be used to purchase or construct a 
principal residence in a qualified disaster area, but 
which was not so used on account of the qualified 
disaster with respect to such area, and
(C) which was received during the period beginning 
on the date which is 180 days before the first day of 
the incident period of such qualified disaster and 
ending on the date which is 30 days after the last day 
of such incident period.
(3) Applicable period.--For purposes of this subsection, 
the term ``applicable period'' means, in the case of a 
principal residence in a qualified disaster area with respect 
to any qualified disaster, the period beginning on the first 
day of the incident period of such qualified disaster and 
ending on the date which is 180 days after the date of the 
enactment of this Act.
(c) Loans From Qualified Plans.--
(1) Increase in limit on loans not treated as 
distributions.--In the case of any loan from a qualified 
employer plan (as defined under section 72(p)(4) of such Code) 
to a qualified individual made during the 180-day period 
beginning on the date of the enactment of this Act--
(A) clause (i) of section 72(p)(2)(A) of such Code 
shall be applied by substituting ``$100,000'' for 
``$50,000'', and
(B) clause (ii) of such section shall be applied by 
substituting ``the present value of the nonforfeitable 
accrued benefit of the employee under the plan'' for 
``one-half of the present value of the nonforfeitable 
accrued benefit of the employee under the plan''.
(2) Delay of repayment.--In the case of a qualified 
individual (with respect to any qualified disaster) with an 
outstanding loan (on or after the first day of the incident 
period of such qualified disaster) from a qualified employer 
plan (as defined in section 72(p)(4) of such Code)--
(A) if the due date pursuant to subparagraph (B) or 
(C) of section 72(p)(2) of such Code for any repayment 
with respect to such loan occurs during the period 
beginning on the first day of the incident period of 
such qualified disaster and ending on the date which is 
180 days after the last day of such incident period, 
such due date shall be delayed for one year (or, if 
later, until the date which is 180 days after the date 
of the enactment of this Act),
(B) any subsequent repayments with respect to any 
such loan shall be appropriately adjusted to reflect 
the delay in the due date under subparagraph (A) and 
any interest accruing during such delay, and
(C) in determining the 5-year period and the term 
of a loan under subparagraph (B) or (C) of section 
72(p)(2) of such Code, the period described in 
subparagraph (A) of this paragraph shall not be 
disregarded.
(3) Qualified individual.--For purposes of this subsection, 
the term ``qualified individual'' means any individual--
(A) whose principal place of abode at any time 
during the incident period of any qualified disaster is 
located in the qualified disaster area with respect to 
such qualified disaster, and
(B) who has sustained an economic loss by reason of 
such qualified disaster.
(d) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any 
amendment to any plan or annuity contract, such plan or 
contract shall be treated as being operated in accordance with 
the terms of the plan during the period described in paragraph 
(2)(B)(i).
(2) Amendments to which subsection applies.--
(A) In general.--This subsection shall apply to any 
amendment to any plan or annuity contract which is 
made--
(i) pursuant to any provision of this 
section, or pursuant to any regulation issued 
by the Secretary of the Treasury (or his 
delegate) or the Secretary of Labor under any 
provision of this section, and
(ii) on or before the last day of the first 
plan year beginning on or after January 1, 
2027, or such later date as the Secretary may 
prescribe.
In the case of a governmental plan (as defined in 
section 414(d) of such Code), clause (ii) shall be 
applied by substituting the date which is two years 
after the date otherwise applied under clause (ii).
(B) Conditions.--This subsection shall not apply to 
any amendment unless--
(i) during the period--
(I) beginning on the date that this 
section or the regulation described in 
subparagraph (A)(i) takes effect (or in 
the case of a plan or contract 
amendment not required by this section 
or such regulation, the effective date 
specified by the plan), and
(II) ending on the date described 
in subparagraph (A)(ii) (or, if 
earlier, the date the plan or contract 
amendment is adopted),
the plan or contract is operated as if such 
plan or contract amendment were in effect, and
(ii) such plan or contract amendment 
applies retroactively for such period.

SEC. 5. SPECIAL RULES FOR QUALIFIED DISASTER-RELATED PERSONAL CASUALTY 
LOSSES.

(a) In General.--If an individual has a net disaster loss for any 
taxable year--
(1) the amount determined under section 165(h)(2)(A)(ii) of 
the Internal Revenue Code of 1986 shall be equal to the sum 
of--
(A) such net disaster loss, and
(B) so much of the excess referred to in the matter 
preceding clause (i) of section 165(h)(2)(A) of such 
Code (reduced by the amount in subparagraph (A)) as 
exceeds 10 percent of the adjusted gross income of the 
individual,
(2) in the case of qualified disaster-related personal 
casualty losses, section 165(h)(1) of such Code shall be 
applied to by substituting ``$500'' for ``$500 ($100 for 
taxable years beginning after December 31, 2009)'',
(3) the standard deduction determined under section 63(c) 
of such Code shall be increased by the net disaster loss, and
(4) section 56(b)(1)(E) of such Code shall not apply to so 
much of the standard deduction as is attributable to the 
increase under paragraph (3).
(b) Net Disaster Loss.--For purposes of this section, the term 
``net disaster loss'' means the excess of qualified disaster-related 
personal casualty losses over personal casualty gains (as defined in 
section 165(h)(3)(A) of such Code).
(c) Qualified Disaster-Related Personal Casualty Losses.--For 
purposes of this section, the term ``qualified disaster-related 
personal casualty losses'' means losses described in section 165(c)(3) 
of such Code which arise in a qualified disaster area on or after the 
first day of the incident period of the qualified disaster to which 
such area relates, and which are attributable to such qualified 
disaster.

SEC. 6. EXTENSION OF EXCLUSION FROM GROSS INCOME FOR COMPENSATION FOR 
LOSSES OR DAMAGES RESULTING FROM CERTAIN WILDFIRES.

Section 3(d) of the Federal Disaster Tax Relief Act of 2023 (Public 
Law 118-148) is amended by striking ``2026'' and inserting ``2036''.

SEC. 7. ADDITIONAL LOW-INCOME HOUSING CREDIT ALLOCATIONS.

(a) In General.--For purposes of section 42 of the Internal Revenue 
Code of 1986, the State housing credit ceiling for any State for each 
of calendar years 2026 and 2027 shall be increased by the aggregate 
housing credit dollar amount allocated by the State housing credit 
agencies of such State for such calendar year to buildings located in 
any qualified disaster zone in such State.
(b) Limitation.--
(1) Application of aggregate limitation.--The increase 
determined under subsection (a) with respect to any State shall 
not exceed--
(A) in the case of any such increase determined for 
calendar year 2026, the applicable dollar limitation 
for such State, and
(B) in the case of any such increase determined for 
calendar year 2027, the applicable dollar limitation 
for such State reduced by the amount of any increase 
determined under subsection (a) with respect to such 
State for calendar year 2026.
(2) Applicable dollar limitation.--For purposes of this 
subsection, the term ``applicable dollar limitation'' means, 
with respect to any State, the product of $8.25 multiplied by 
the population of such State (as determined for calendar year 
2025).
(c) Extension of Placed in Service Deadline for Designated Housing 
Credit Dollar Amounts.--
(1) In general.--In the case of any housing credit dollar 
amount which is allocated by a State housing credit agency of a 
State for calendar year 2026 or 2027 to a building located in a 
qualified disaster zone in such State and which is designated 
(at such time and in such manner as the Secretary may provide) 
by such State housing credit agency as housing credit dollar 
amount to which this subsection applies, section 42(h)(1)(E) of 
such Code shall be applied--
(A) by substituting ``third calendar year'' for 
``second calendar year'' each place it appears, and
(B) by substituting ``2 years'' for ``1 year'' in 
clause (ii) thereof.
(2) Application of limitation.--The aggregate amount of 
housing credit dollar amount designated under paragraph (1) for 
any calendar year by all State housing credit agencies of a 
State shall not exceed the amount determined under subsection 
(b)(1) with respect to such State for such calendar year.
(d) Allocations Treated as Made First From Additional Allocation 
for Purposes of Determining Carryover.--For purposes of determining the 
unused State housing credit ceiling for any calendar year under section 
42(h)(3)(C) of such Code, any increase in the State housing credit 
ceiling under subsection (a) shall be treated as an amount described in 
clause (ii) of such section.

SEC. 8. DEFINITIONS.

In this Act--
(1) Qualified disaster area.--The term ``qualified disaster 
area'' means any area with respect to which a major disaster 
was declared, during the period beginning on January 1, 2025, 
and ending on the date which is 60 days after the date of the 
enactment of this Act, by the President under section 401 of 
the Robert T. Stafford Disaster Relief and Emergency Assistance 
Act, if the incident period of the disaster with respect to 
which such declaration was made begins on or after December 28, 
2024, and on or before the date of the enactment of this Act.
(2) Qualified disaster zone.--The term ``qualified disaster 
zone'' means that portion of any qualified disaster area which 
was determined by the President, during the period beginning on 
January 1, 2025, and ending on the date which is 60 days after 
the date of the enactment of this Act, to warrant individual or 
individual and public assistance from the Federal Government 
under the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act by reason of the qualified disaster with respect 
to such disaster area.
(3) Qualified disaster.--The term ``qualified disaster'' 
means, with respect to any qualified disaster area, the 
disaster by reason of which a major disaster was declared with 
respect to such area.
(4) Incident period.--The term ``incident period'' means, 
with respect to any qualified disaster, the period specified by 
the Federal Emergency Management Agency as the period during 
which such disaster occurred, except that for purposes of this 
Act, such period shall not be treated as ending after the date 
which is 30 days after the date of the enactment of this Act.
<all>