H.R.140 - Hurricane Helene and Milton Tax Relief Act of 2025 (119th Congress)
Summary
H.R. 140, the "Hurricane Helene and Milton Tax Relief Act of 2025," aims to provide tax relief to individuals and businesses affected by Hurricanes Helene and Milton. The bill introduces several tax-related provisions to ease the financial burden on those impacted by the disasters. These provisions include modifications to earned income credit calculations, increased limitations on charitable contributions for disaster relief, and special rules for the use of retirement funds.
Expected Effects
The bill's enactment would allow eligible individuals to use their prior year's income for earned income credit calculations if it's more favorable. It also increases the limit on deductible charitable contributions for hurricane relief and provides flexibility in using retirement funds without penalty. These measures are intended to provide immediate financial assistance and encourage charitable giving to support recovery efforts.
Potential Benefits
- Allows eligible individuals to use prior year's income for Earned Income Tax Credit (EITC) calculation if higher, providing a larger tax refund.
- Increases the limitation on deductible charitable contributions for hurricane disaster relief, incentivizing donations.
- Permits penalty-free withdrawals from retirement accounts for hurricane-related expenses, up to $100,000, with an option to recontribute the funds.
- Allows recontribution of withdrawals for home purchases that were not used due to the hurricanes.
- Provides loan relief from qualified plans, increasing loan limits and delaying repayment schedules.
Potential Disadvantages
- May increase the complexity of tax filings for affected individuals, requiring them to understand and apply new rules.
- Could potentially lead to errors in tax calculations, even with the provision treating errors as mathematical errors.
- The increased charitable contribution limits could disproportionately benefit higher-income individuals who are more likely to itemize deductions.
- May create opportunities for abuse or fraud related to retirement fund withdrawals and charitable contributions.
- The short-term tax relief measures may not address the long-term economic challenges faced by disaster-affected communities.
Constitutional Alignment
The bill aligns with the Constitution's general welfare clause (Preamble) by providing relief to those affected by natural disasters. Congress's power to tax and spend for the general welfare is established in Article I, Section 8. The specific provisions related to tax credits, charitable deductions, and retirement funds fall under Congress's authority to regulate taxation. There are no apparent infringements on individual rights or liberties as defined by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).