House Passes Disaster Tax Relief Bill

Though the broad bipartisan tax bill remains stalled, the House overwhelmingly passed a portion of that package aimed at aiding disaster survivors as a standalone bill on Tuesday, with a 382-7 vote.

The Federal Disaster Tax Relief Act (HR 5863), sponsored by Representative Greg Steube (R-FL), advanced out of the Ways and Means Committee late last year. It would exclude from individual income, for tax purposes, compensation received for losses, damages, and expenses incurred due to a federally declared disaster. It also would exclude from individual income compensation received by those impacted by the February 2023 train derailment in East Palestine, Ohio.

The bill was incorporated into the bipartisan tax bill, the Tax Relief for American Families and Workers Act (HR 7024), that passed the House in January. But with no action in the Senate on that bill for months, Steube said his constituents were “rightly outraged.” Among Steube’s constituents are survivors of 2022 Hurricane Ian. “Many other Americans have waited just as long for relief from other disasters,” he added.

Steube took an unusual action to bring the disaster tax relief bill to the House floor — a discharge petition. After obtaining 218 signatures from voting members, Steube was able to force a vote on the bill this week.

“No disaster survivor is ever made whole,” and “nobody is getting 100% of what they lost,” said Ways and Means Tax Subcommittee Ranking Member Mike Thompson (D-CA), speaking in support of the bill. “But to add insult to injury,” he explained, some survivors end up owing taxes on compensation payments “because depending upon the taxpayer, the payments may qualify as income.” He added, “I have yet to encounter a single person on either side of the aisle who believes this is fair.”

Of the stalled bipartisan tax bill, Thompson said, “the Senate ought to quit dithering on what’s an objectively good bill for our country and just pass it.” Because they’re “unwilling to do so,” he explained, the House has taken up the disaster relief issue separately.

Representative Jill Tokuda (D-HI), whose constituents include survivors of the 2023 Maui fires, also spoke in support of disaster tax relief bill. Tokuda said “disaster does not discriminate. It doesn’t care if you are Democrat, Independent, or Republican. But when it hits, people need help.” She called on lawmakers to “embrace their kuleana” — a Hawaiian concept encompassing both responsibility and privilege.

“A vast group of bipartisan lawmakers want to see this legislation accomplished,” said Representative Doug LaMalfa (R-CA) of the disaster tax relief bill. LaMalfa’s constituents include survivors of the 2018 Camp Fire and 2020 Zogg Fire. “The House has now passed this initiative twice, and I will continue to move it forward until President Biden signs it into law,” said LaMalfa.

As to the standalone bill’s chances in the Senate, Finance Committee Ranking Member Mike Crapo (R-ID) has said he would not object to the disaster tax relief proposal moving on its own.

Senate Finance Committee Chair Ron Wyden (D-OR), however, is still holding out hope for the broad bipartisan tax bill. “The only reason [that bill] didn’t become law as early as February is because Senate Republican leaders have been blocking it,” said Wyden.

“Senate Democrats don’t want to drop our priorities and reward Republicans who’ve been stalling,” Wyden added. “Senate Republicans will have an opportunity to show whether they in fact support disaster relief when the Tax Relief for American Families and Workers Act comes up for a vote soon.”