President Trump Enacts Doug LaMalfa Federal Disaster Tax Relief Certainty Act on September 11, 2026

Congress officially enacted the Doug LaMalfa Federal Disaster Tax Relief Certainty Act on September 11, 2026, when President Donald Trump signed the bipartisan, bicameral legislation into law. This new measure extends crucial federal income tax treatment for qualified disaster-related casualty losses and expands exclusions for wildfire relief payments, providing significant financial relief to individuals and businesses impacted by natural disasters across the United States.

The Act, designated H.R. 5366, was passed by the Senate via unanimous consent on August 7, 2026, after originating in the House. It aims to alleviate the financial burden on survivors of various natural disasters, particularly those affected by wildfires, by ensuring more immediate and extended access to tax relief.

The enactment of the Doug LaMalfa Federal Disaster Tax Relief Certainty Act represents a critical step forward in supporting small and mid-sized businesses and individuals grappling with the aftermath of natural disasters. We've consistently observed that the financial strain following a disaster often extends far beyond the immediate incident, with recovery efforts and related legal settlements sometimes taking years to materialize. This legislation, particularly its extension of the federal tax deduction for qualified disaster-related personal casualty losses and the expanded exclusion for qualified wildfire relief payments, provides much-needed clarity and an extended window for businesses to claim legitimate deductions and exclusions. For many of our clients, navigating the complexities of disaster-related tax provisions can be overwhelming, especially when they are simultaneously focused on rebuilding operations. Our view is that this Act offers a more pragmatic timeline for recovery-related tax planning. C&S Finance Group LLC specializes in tax preparation and compliance, and we are well-equipped to help businesses understand how these new provisions apply to their specific situations, ensuring they maximize eligible relief. Business owners facing disaster-related losses should proactively assess their eligibility by contacting C&S Finance Group LLC at csfinancegroup.com to explore how this law can benefit their recovery efforts.

One of the key provisions of the new law is the extension of the federal tax deduction for qualified disaster-related personal casualty losses. Under previous law, a “qualified disaster area” was defined as an area where a major disaster had been declared during a period beginning in 2020 and ending 60 days after July 4, 2025, provided the incident period began on or after December 28, 2019, and on or before July 4, 2025. The new Act significantly extends this by defining a qualified disaster area as one where a major disaster has been declared with an incident period beginning on or after December 28, 2019, and before January 1, 2027. This broader timeframe ensures that more recent and future disaster victims will qualify for the special tax treatment.

Furthermore, the legislation modifies the exclusion from gross income for qualified wildfire relief payments. Previously, such payments were excludable if they were attributable to forest or range fires declared a federal disaster after 2014 and received after 2019 and before 2026. The new Act expands this, making the exclusion applicable to payments attributable to forest or range fires declared a federal disaster after 2014 and before 2027, regardless of when these payments are received. This change is particularly impactful for victims of wildfires, who often face lengthy settlement processes that extend years beyond the actual disaster event.

Beyond these extensions, the Doug LaMalfa Federal Disaster Tax Relief Certainty Act introduces a significant benefit for individuals with qualified net disaster losses. Effective for taxable years beginning after December 31, 2024, these individuals can now deduct their losses without the requirement of itemizing deductions and without applying the 10 percent adjusted gross income (AGI) limitation. This particular change simplifies the process for many taxpayers, especially those who might not typically itemize their deductions but have incurred substantial disaster-related costs.

The legislation was renamed last year to honor Congressman Doug LaMalfa, who passed away in January of 2026, acknowledging his dedication to securing tax relief for disaster victims. Senators Adam Schiff (D-Calif.) and Rick Scott (R-Fla.) spearheaded the bipartisan, bicameral effort, with additional support from Representatives Greg Steube, Mike Thompson, and Jimmy Panetta, and Senator Ron Wyden (D-OR), who led the Senate effort as fires raged in his home state and elsewhere in the western United States.

For small and mid-sized businesses, the ramifications of this Act are substantial. Many such businesses operate with tighter margins and less robust insurance coverage than larger corporations, making them particularly vulnerable to the financial shocks of natural disasters. The extended timelines for claiming casualty losses and excluding wildfire relief payments offer a longer runway for recovery planning and financial reconciliation. The ability for individual business owners to deduct qualified net disaster losses without itemizing or facing the AGI limitation can directly translate into quicker access to vital funds for rebuilding and maintaining operations.

Looking ahead, businesses and individuals impacted by natural disasters should review the new provisions to understand how they may apply to their specific circumstances. While the Act provides certainty and extended relief, navigating its intricacies will still require careful attention to detail. Further guidance from the Internal Revenue Service may be forthcoming to clarify the implementation of these changes, and taxpayers are encouraged to stay informed of any developments that could affect their eligibility for relief.