The U.S. Senate passed the Federal Disaster Tax Relief Act late last week. In addition to providing relief to those affected by hurricanes, this legislation would benefit cattle producers who received payments due to wildfires. Previously, these payments counted as taxable income, meaning producers who already suffered from disasters were negatively impacted again by having their relief payments taxed.
“It is heartbreaking to see your farm or ranch destroyed by a disaster and it only adds to the pain when the payments meant to help you recover come with a tax bill,” said NCBA President and Wyoming rancher Mark Eisele. “With the devastating hurricanes and wildfires the cattle industry has suffered over the past several years, helping producers recover and stay in business is a top priority for NCBA. The Federal Disaster Tax Relief Act will prevent recovery payments from being taxed and be another tool for producers rebuilding their livelihood.”
The bill addresses limitations in casualty losses and allows producers to take greater deductions for disaster-related losses. It also excludes any payments received due to a “qualified wildfire disaster” from being counted as income for federal tax purposes. The bill retroactively applies to any wildfire payments received in tax years 2020 through 2025. Producers will have the opportunity to file with the Internal Revenue Service (IRS) for relief payments received in these previous years.
Both the House and Senate have passed the Federal Disaster Tax Relief Act. It now goes to the president’s desk for his signature. NCBA is urging President Joe Biden to swiftly sign the bill into law.