Senators offer disaster tax relief bill

A bipartisan group of senators on Wednesday offered legislation to provide tax relief to individuals and businesses affected by natural disasters, such as August’s derecho in the Midwest, the wildfires in western states, and Hurricanes Laura and Isaias.

The bill was introduced by Iowa Sens. Joni Ernst (R) and Chuck Grassley (R), California Sen. Dianne Feinstein (D) and Louisiana Sens. Bill Cassidy (R) and John Kennedy (R) — all of whom represent states impacted by disasters in recent months.

“This bipartisan legislation will allow Iowans to keep more of their own hard-earned money to get back on their feet and rebuild after the historic storm,” Grassley said, referring to the derecho that pummeled parts of his home state. “Congress should pass this bill before the 2021 tax filing season begins so that families, farmers and businesses have enough time to use this relief for a swift recovery.”

The bill includes several tax provisions that would apply to individuals and businesses in regions that are designated as presidentially declared disaster areas from July 1 through 60 days after the bill’s enactment.

It includes provisions to remove penalties on early withdrawal from retirement accounts, suspend limits on deductions for certain charitable contributions and provide an employee retention tax credit. It would also allow low-income individuals to use their previous year’s income when claiming certain tax credits, so that they don’t receive smaller credits for 2020 if their incomes declined as a result of the disaster.

“We should provide our families, communities, and businesses more relief by getting rid of burdensome taxes and penalties, and that’s what this commonsense, bipartisan bill would do,” Ernst said.

Congress has enacted similar disaster tax relief provisions in the past. An omnibus spending package enacted in December included provisions to provide tax relief for individuals and businesses affected by disasters that occurred in 2018 and 2019.