The Republican tax reform plan received fresh criticism from media this week after reports emerged that the Tax Cuts and Jobs Act would eliminate a deduction for homeowners affected by wildfires. The final text of the GOP tax overhaul has not been released, but versions of the bill in the House and Senate include a repeal, or partial repeal, of a provision that grants homeowners a tax write-off for property damage caused by wildfires.
Under current law, if a taxpayer suffers property damage that exceeds 10 percent of their gross income, the excess amount may be deducted from federal taxes. The House plan includes a complete repeal of this provision, while the Senate version only allows the deduction in scenarios where the president uses the federal disaster declaration, an uncommon occurrence for wildfires. If the tax bill is signed into law by Christmas, damages incurred after January 1, 2018, will not be eligible for the deduction.