Tax Law Changes Related to Natural Disaster Relief

The National Disaster Relief Act, signed into law last year, provides tax relief for victims of federally declared disasters occurring after Dec. 31, 2007, and before Jan. 1, 2010. Please pass this information along to your nonprofit colleagues and clients, especially those impacted by Hurricanes Gustav and Ike.

This law provides a broad package of tax benefits that may be used by anyone who is affected by a federally declared disaster.


In summary, the National Disaster Relief Act:

• Allows all taxpayers, not just those who itemize, to claim the casualty loss deduction regardless of the taxpayer’s adjusted gross income level;
• Increases the amount by which all individual taxpayers must reduce their personal casualty losses from each casualty from $100 to $500 for taxable years beginning after Dec. 31, 2008. The reduction amount returns to $100 for taxable years beginning after Dec. 31, 2009;
• Removes the requirement that the net casualty loss deduction be allowed only if the casualty loss exceeds 10 percent of the taxpayer’s adjusted gross income;
• Provides a five-year net operating loss (NOL) carryback for qualified natural disaster losses;
• Provides for an increased charitable mileage deduction and an increase in the charitable use of a vehicle allowance.