WASHINGTON – This week, Rep. Mike Thompson (D-St. Helena), chairman of the House Ways and Means Subcommittee on Select Revenue Measures, announced the introduction of the Disaster Tax Relief Act of 2021. This bill uses tax legislation to provide relief to natural disaster survivors and includes several disaster relief laws that it previously put in place. An explanation from Thompson is below.
“As our district continues to recover from the recent devastating fires and prepare for another fire season, it is vital that the federal government allocate all possible resources to remediate and mitigate the effects of future disasters. This is why I am proud to introduce the Disaster Tax Relief Act of 2021, a comprehensive law that uses the tax code to help people and small businesses affected by natural disasters such as fires. Not only does it relieve the tax burden on disaster survivors and give them financial flexibility, but it also provides incentives to invest in civil protection projects for individuals and small businesses. It is important that we pass this law immediately so that survivors of the fire do not have to wait any longer. “
You can visit https://www.congress.gov/bill/117th-congress/house-bill/3954 to learn more about HR 3954, the Disaster Tax Relief Act of 2021. The bill includes:
Disaster tax relief in Sections 1-6 that:
- Allows qualified individuals in federally declared disaster areas to withdraw up to $ 100,000 from tax-exempt retirement plans with no tax penalty,
- Increases the ceiling on retirement plan loans to $ 100,000 that will not be treated as distributions to individuals in federally declared disaster areas,
- Creation of a tax credit for employee retention for employers affected by a disaster, up to 40 percent of the qualified wage for each employee,
- Extends the right to disaster-related personal accident damage and
- Suspends the limit on nonprofit corporate donations to disaster relief programs
Disaster risk reduction tax incentives in Sections 7 and 8 that:
- states that payments made under an eligible state or local civil protection program are not considered income for federal income tax purposes, and
- Exempt from federal income tax calculations payments under agricultural emergency programs, including the Wildfires and Hurricane Indemnity Program (WHIP), the Livestock Indemnity Program, the Tree Assistance Program, and the Non-Insured Crop Disaster Assistance Program.
Expanded support for Disaster Affected Small Businesses in Sections 9 through 11 that:
- Providing small business aid by empowering the Small Business Administration (SBA) to exceed the $ 100,000 limit on grants to small business development centers in disaster areas; and
- Authorizes SBA and the Farm Service Agency to provide loans to companies that are deemed essential to disaster recovery
Tax credit for qualified forest fire mitigation expenses in Section 12 that:
- Offers 30 percent of eligible expenses tax credit to individuals and businesses participating in an eligible state fire resistance program such as the California Forest Improvement Program
- This is to encourage individuals to participate in forest fire resilience programs while further stretching the state budget for these programs
File Photo (Aidan Freeman / Lake County Publishing)
(File-LAKE COUNTY PUBLISHING) Rep. Mike Thompson speaks to part of his Lake County constituency in Lower Lake in 2019.