People who sustained financial losses because of Hurricane Harvey could be in line for some new tax breaks under legislation being proposed by U.S. Rep. Kevin Brady.
Heading into the weekend, Brady, R-The Woodlands, released details on his bill called The Disaster Tax Relief and Airport and Airway Extension Act of 2017. The bill is set to be introduced Monday when the House returns to session.
In addition to people hurt financially by Hurricane Harvey, the legislation would provide tax breaks for people who have financial losses from Hurricane Irma, which devastated Florida, as well as Hurricane Maria, which was moving through the Caribbean.
Under the bill, new tax rules would allow penalty-free access to retirement funds, by creating an exception to the 10 percent early retirement plan withdrawal penalty for qualified hurricane relief distributions. The bill also would allow for the re-contribution of retirement plan withdrawals for home purchases that were canceled because of the hurricanes. There would be what's being described as "flexibility" for loans taken out on retirement plans for Harvey victims and victims of the other hurricanes.
The bill also would create new rules for deductions for personal casualty losses. Current law requires that personal casualty losses must exceed 10 percent of adjusted gross income; but under Brady's proposal, that minimum percentage would be eliminated. Also being done away with would be the current requirement that taxpayers must itemize deductions to get the tax relief.
"My bill specifically helps hurricane victims keep more of their paycheck, deduct more of the cost of their expensive property damage, and have more affordable and immediate access to money they have saved for their retirement," Brady said in a statement. "The legislation will also encourage even more Americans to donate generously to help those in need. Taken together, these tax relief measures will help more people be able to bear the tremendous expense of recovering from these destructive hurricanes."
The bill is intended to encourage charitable giving by temporarily suspending limitations on the deduction for charitable contributions associated with qualified hurricane relief made before the end of the year, provides a 40 percent tax credit of wages for employers in disaster areas.
With Harvey causing billions of dollars worth of damage, the Federal Emergency Management Agency is estimating Harvey may be the second-costliest storm in the history of the federal insurance program.
