Severe storms, flooding, wildfires, and other disasters affect millions of Americans each year and often cause major damage to homes and personal property. If a loss is suffered, a tax deduction may be available.
WHAT LOSSES ARE DEDUCTIBLE?
For tax years 2018 through 2025, personal casualty losses are deductible only when related to a federally declared disaster.
Beginning January 1, 2026, Federal tax law expands eligibility to include losses from certain state‑declared disasters. This change allows more taxpayers to qualify
If you suffered damages from a Federal or state declared disaster, please track your expenses paid for repairs and replacements.
LIMITS THAT APPLY
- Insurance Reimbursement: Any insurance reimbursement reduces the deductible amount. A fully insured loss is not deductible.
- 10% Income Limitation: A loss due to a Federally declared disaster is 100% deductible for disasters that occurred between 02/26/2021 and 07/04/2025. Disasters occurring after 07/04/2025 are only deductible to the extent they exceed 10% of your annual adjusted gross income.
- Itemized Deduction Requirement: Disasters occurring after 07/04/2025 are only eligible to be deducted as an itemized deduction. Taxpayers taking the standard deduction ($15,750 Single, $31,500 Married Joint for 2025) may not benefit from a disaster loss.
MO HOMESTEAD TAX CREDIT
Missouri has enacted a new tax credit called the “Homestead Tax Credit”. This tax credit allows individuals taxpayers a credit of up to $5,000 for insurance deductibles paid due to damage from a federally declared disaster in Missouri during 2025.
Federally declared disaster areas include St. Louis County, St. Louis City, Jefferson County, Franklin County, and many others. If you live in one of these counties, you may be eligible to claim this credit.
Questions? Contact us.
