If a federally declared disaster like a hurricane damages or destroys your home or other property, then you may be able to deduct those losses from your income taxes. Read below to understand whether this deduction could apply to you — and, just as important, which version of the rules applies to your disaster.

The Federal Tax Deduction for Disasters

Each year, major natural disasters — hurricanes, fires, floods, tornadoes — cost property owners billions of dollars in damage. If a major disaster damages or destroys your home, business, or belongings, you may be able to file an insurance claim to recover your losses. But if your insurance or disaster aid doesn't cover all of your losses, you may be left holding the bag, either because your damaged property is now worth less or because you paid out-of-pocket to repair your property. To lessen that hardship, the federal government created the casualty loss deduction, which allows you to deduct some of your disaster-related losses from your taxable income.

Eligibility for the Disaster Deduction

Like all tax breaks, the eligibility criteria for the disaster deduction (technically, the "casualty loss deduction") are complex. Below are the primary requirements you should consider when deciding whether your losses may be eligible.

Personal-use losses must be caused by a federally declared disaster — or, starting with 2026 returns, a state-declared one

Although the casualty loss deduction allows businesses to claim a deduction on certain non-disaster property losses, losses to personal-use property (think your residence and personal belongings) are eligible for a deduction only if:

  1. Your losses were caused by a federally declared disaster, and
  2. Your losses occurred in a state receiving a federal disaster declaration.

This rule wasn't always going to stick around. The federal-declaration requirement came from the Tax Cuts and Jobs Act of 2017, which originally scheduled it to expire after the 2025 tax year. It no longer does: the One Big Beautiful Bill Act (P.L. 119-21, enacted July 2025) repealed that expiration, making the federally-declared-disaster requirement permanent. If you're comparing this article to an older source — including an earlier version of this one — that treated the rule as either timeless or expiring, that 2025 law is what changed.

The same law also opened a second path. Starting with tax years that begin after December 31, 2025 — that is, 2026 returns and forward — a loss can also qualify through a "state declared disaster." But the bar is higher than the name suggests: your state's Governor (or the Mayor, for the District of Columbia) must determine that the catastrophe is severe enough to warrant these rules, and the U.S. Treasury Secretary must make the same determination. A governor's emergency declaration on its own is not enough. And because this path applies only from tax year 2026 forward, it doesn't reach back — a state-only disaster from 2025 or earlier still needed a federal declaration to qualify.

Not sure whether your damage was caused by a federally declared disaster? FEMA maintains an official database of all federally declared disasters, updated as new declarations are issued — search it by state and year to find your event. The state abbreviation at the end of the disaster declaration number indicates the state that received the disaster declaration, so check that suffix matches where your loss occurred, not just that the event is listed.

The deduction covers property loss, not additional living expenses

The casualty loss deduction is meant to compensate you for the loss in value to your property. Property includes all property you own, including homes, boats, cars, and personal belongings. But the deduction does not cover property you rent (although you might have a renter's policy claim). And it doesn't provide a break for other expenses you incur because of a natural disaster, such as travel and lodging expenses. Those additional living expenses may be reimbursable under your insurance policy, but they're not eligible for a tax deduction.

You can't deduct reimbursed losses

This one shouldn't be a surprise, but you can't claim a deduction for property losses if your insurance company or anyone else reimburses you for those losses. You can only deduct what is a net loss to you. That includes reimbursement you expect to receive, not just what has already arrived — if you have a reasonable possibility of being reimbursed for part of your loss, you subtract that amount when figuring the deduction, even if the payment hasn't landed yet.

If your insurance company reimburses some but not all of your losses, you can claim a deduction on the unreimbursed portion of your losses. Even if your insurance company "fully" covers your losses, don't forget about your deductible! By definition, losses to your property that are less than your deductible aren't reimbursed by insurance and may be eligible for a tax deduction.

You do need to actually file an insurance claim if your losses are covered by insurance. If you fail to file a timely insurance claim on property losses covered by insurance, you can only claim a deduction on the part of the loss your policy doesn't cover — typically, your deductible.

Just as general disaster expenses not tied to property loss aren't eligible for a deduction, general disaster aid not tied to property loss doesn't count against you as a reimbursement for your lost property. As an example, let's say a hurricane that is a federally declared disaster forced you to evacuate from your home and spend a month in a hotel. Your insurance company reimbursed some of the expenses you incurred during that month as additional living expenses (ALE), and FEMA gave you disaster aid for the travel and lodging expenses not covered by insurance. In this scenario, neither the ALE insurance payments nor the FEMA aid counts as reimbursement of your property losses.

One category of disaster money works differently, though, and it's worth keeping separate in your mind: benefits from federal or state programs that pay to restore your property — a rebuilding grant, for example — do count as reimbursement, the same way an insurance payment would. The dividing line is what the money is for. Aid for lodging, travel, and living expenses doesn't reduce your deduction; money that repairs or rebuilds the property itself does.

One more note on eligibility as a whole. The rules above are the real rules, and they're worth knowing cold. But whether your loss qualifies — was it caused by a declared disaster, is your property inside the declared area, does your disaster make the qualified-disaster list discussed below — is a fact-specific determination about your particular situation. Put that determination in front of a tax professional before you build your return around it.

Calculating the Disaster Deduction

In theory, calculating your disaster deduction is simple: It's the amount by which a federally declared disaster decreases the fair market value of your property. In practice, calculating your disaster deduction is much more complicated, and you should consult IRS instructions and/or a tax professional before submitting your final deduction amount to the IRS.

Basic Formula

Here's the basic formula for determining the amount of your disaster deduction:

  1. Determine your adjusted basis in your property before the disaster.
  2. Determine how much the disaster decreased the fair market value (FMV) of your property.
  3. Take the smaller amount of (1) and (2) (your FMV loss can't be more than the adjusted basis value of your home), and subtract any insurance or other reimbursement you received or expect to receive.

Determining the decrease in the fair market value of your property

The IRS allows you to use several methods to calculate changes to the FMV of your property. Two of the most common methods are appraisal and the cost of repairs. In an appraisal, a competent professional determines the value of your property immediately before and after the hurricane, tornado, fire, or other disaster damaged the property.

The cost of repairing your property can also serve as a valid measure of the change in FMV to your property if all of the following conditions are met:

  • The repairs are actually made.
  • The repairs are necessary to bring the property back to its condition before the disaster.
  • The amount spent for repairs isn't excessive.
  • The repairs take care of the damage only.
  • The repairs do not increase the value of the property compared to the property's value just before the disaster loss.

The Ten Percent Rule for personal-use property — and its closed-list exception

If your damaged property is used for personal purposes rather than business purposes, then in most cases you can claim a disaster deduction only to the extent that your loss exceeds the sum of $100 plus 10% of your adjusted gross income (AGI). This formula is a little confusing, so here's an example of how it works in practice. Let's say your AGI is $50,000, and a tornado causes $20,000 of unreimbursed damage to your primary residence (which you use only for personal purposes). To calculate your disaster deduction, you would first figure out the amount that is 10% of your AGI. Here, your AGI is $50,000, so 10% of your AGI is $5,000. Now add $100 dollars to that amount, which makes $5,100. Under the Ten Percent Rule, you must subtract this $5,100 from your eligible disaster losses before you can apply for the disaster deduction. Here your disaster losses were $20,000, and when you subtract $5,100 from that amount you're left with $14,900. So in this scenario, the amount that you could deduct from your taxable income is $14,900, not the full $20,000 that you sustained in disaster losses.

This is the ordinary case, and it's the math that applies to most disasters — including, importantly, disasters declared after September 2, 2025.

There is an important exception to the Ten Percent Rule that applies to qualified disaster losses. Qualified disasters are a special subset of federally declared disasters that Congress designates from time to time as being exempt from the Ten Percent Rule. If your property is damaged by a qualified disaster, the treatment is meaningfully better on three counts: you do not subtract 10% of your AGI at all, the $100 floor is replaced by a $500 floor, and you can add the deduction on top of your standard deduction instead of having to itemize.

Your disaster's place on that list is checkable, though. The IRS keeps the running record at IRS.gov/DisasterTaxRelief, and because the list only moves when Congress moves it, that page — not a dated article, this one included — is where a change will show up first. Look your disaster up there before you count on the enhanced treatment.

Whether the ordinary deduction actually helps you comes down to itemizing. The ordinary casualty loss deduction is an itemized deduction — if your total itemized deductions don't add up to more than your standard deduction, the casualty loss deduction won't change what you owe, even when your loss technically qualifies. Qualified disaster losses are the exception to this barrier: they can be deducted on top of the standard deduction, which is a large part of why the closed list matters.

Time Period for Claiming the Disaster Deduction

Under the tax code, you can claim the disaster deduction for the tax year in which the disaster occurred or in the tax year preceding the year in which the disaster occurred. This rule allows you to take advantage of the disaster deduction sooner than you otherwise could. Note that it applies only if your property is located in a county or parish that's eligible for public or individual FEMA assistance under the disaster declaration (not just the state where the federally declared disaster occurred). For example, if a disaster damaged your home and belongings in January of 2026, you could apply your disaster deduction to your 2025 tax return instead of needing to wait another year before filing your 2026 return.

You must make the election within six months after the regular due date (without extensions) for filing your original return for the disaster year. Because that date rolls forward every filing season, think of it as a formula rather than a fixed date — find your normal filing deadline for the year the disaster happened, then add six months.

And if you make the election and later change your mind, revoking it runs on its own separate, later clock — 90 days after the election deadline, and no later than the day you file your return for the disaster year itself — so the election isn't irreversible, but neither window stays open indefinitely.