Bipartisan legislation introduced by U.S. Sen. Joni Ernst (R-IA) giving tax relief to Americans in presidentially declared disaster areas, such as last summer’s derecho in Iowa, became law as part of the Consolidated Appropriations Act for Fiscal Year 2021.
“As Iowans continue to recover from the devastating derecho that swept across our state in the summer, this new law will remove burdensome taxes and penalties and provide Iowa families, communities and businesses more relief and support during these challenging times,” Sen. Ernst said.
The Disaster Tax Relief Act of 2020, S. 4596, which Sen. Ernst sponsored in September 2020 with several original cosponsors, including U.S. Sen. Chuck Grassley (R-IA), Bill Cassidy (R-LA), and Dianne Feinstein (D-CA).
Specifically, the senator’s bill will set forth tax relief provisions for individual and business taxpayers residing in a disaster zone during the period beginning on July 1, 2020, and ending 60 days after the enactment of the appropriations measure, H.R. 133, which was signed into law by the president on Dec. 27, 2020.
Among numerous provisions, Sen. Ernst’s bill allows penalty-free disaster-relief withdrawals from tax-exempt retirement plans up to $100,000; increases to $100,000 the limit on loans for disaster assistance from retirement plans; allows employers affected by a disaster a 40-percent tax credit for the purpose of retaining employees; and increases the tax deduction for corporate disaster relief contributions, according to the congressional record bill summary.