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Senators offer disaster tax relief bill

Senators offer disaster tax relief bill
© Bonnie Cash

A bipartisan group of senators on Wednesday offered legislation to provide tax relief to individuals and businesses affected by natural disasters, such as August's derecho in the Midwest, the wildfires in western states, and Hurricanes Laura and Isaias.

The bill was introduced by Iowa Sens. Joni ErnstJoni Kay ErnstOvernight Defense: Pentagon details military construction projects getting .2B restored from wall funds | Biden chooses former commander to lead Navy | Bill seeks to boost visa program for Afghans who helped US Meghan McCain: Harris 'sounded like a moron' discussing immigration Senate bill would add visas, remove hurdles to program for Afghans who helped US MORE (R) and Chuck GrassleyChuck Grassley 64 percent of Iowans say 'time for someone else' to hold Grassley's Senate seat: poll Five takeaways on the Supreme Court's Obamacare decision On The Money: Yellen, Powell brush off inflation fears | Fed keeps rates steady, upgrades growth projections MORE (R), California Sen. Dianne FeinsteinDianne Emiel FeinsteinYouth climate activists march outside California homes of Pelosi and Feinstein Cosmetic chemicals need a makeover Progressives want to tighten screws beyond Manchin and Sinema MORE (D) and Louisiana Sens. Bill CassidyBill CassidyCentrists gain foothold in infrastructure talks; cyber attacks at center of Biden-Putin meeting Centrists gain leverage over progressives in Senate infrastructure battle Overnight Health Care: Takeaways on the Supreme Court's Obamacare decision | COVID-19 cost 5.5 million years of American life | Biden administration investing billions in antiviral pills for COVID-19 MORE (R) and John KennedyJohn Neely KennedyMORE (R) — all of whom represent states impacted by disasters in recent months.

“This bipartisan legislation will allow Iowans to keep more of their own hard-earned money to get back on their feet and rebuild after the historic storm," Grassley said, referring to the derecho that pummeled parts of his home state. "Congress should pass this bill before the 2021 tax filing season begins so that families, farmers and businesses have enough time to use this relief for a swift recovery.”

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The bill includes several tax provisions that would apply to individuals and businesses in regions that are designated as presidentially declared disaster areas from July 1 through 60 days after the bill's enactment.

It includes provisions to remove penalties on early withdrawal from retirement accounts, suspend limits on deductions for certain charitable contributions and provide an employee retention tax credit. It would also allow low-income individuals to use their previous year's income when claiming certain tax credits, so that they don't receive smaller credits for 2020 if their incomes declined as a result of the disaster.

"We should provide our families, communities, and businesses more relief by getting rid of burdensome taxes and penalties, and that’s what this commonsense, bipartisan bill would do,” Ernst said.

Congress has enacted similar disaster tax relief provisions in the past. An omnibus spending package enacted in December included provisions to provide tax relief for individuals and businesses affected by disasters that occurred in 2018 and 2019.