H.R. 140 — Hurricane Helene and Milton Tax Relief Act of 2025

This section establishes the short title of the Act as the “Hurricane Helene and Milton Tax Relief Act of 2025” and sets out the table of contents for the bill’s 5 sections.

This section defines an “eligible individual” as a person whose principal place of abode at any time during the incident period was in a qualified hurricane disaster area and who sustained an economic loss because of Hurricane Helene or Hurricane Milton; defines a “qualified hurricane disaster area” as an area for which the President had already declared a major disaster under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act because of Hurricane Helene or Hurricane Milton before enactment; and defines the “incident period” as September 28, 2024, through November 2, 2024.

This section allows an eligible individual whose earned income in a taxable year that includes part of a qualified hurricane disaster incident period is lower than in the preceding taxable year to elect to calculate the earned income tax credit under section 32 of the Internal Revenue Code using the prior year’s earned income instead of current-year earned income. It applies to joint returns if either spouse is an eligible individual and uses the sum of both spouses’ prior-year earned income, treats an incorrect use of the election as a mathematical or clerical error under section 6213, and limits the election to a single taxable year for each taxpayer or spouse.

This section increases the charitable contribution deduction limits for qualified hurricane disaster contributions made in cash to eligible public charities for relief efforts related to Hurricane Helene or Hurricane Milton in a qualified hurricane disaster area. For individuals, the deductible amount is limited to the taxpayer’s contribution base minus other charitable contributions otherwise allowed under section 170(b)(1) of the Internal Revenue Code, and any excess may be carried forward for 5 succeeding years; for corporations, the deductible amount is limited to 20 percent of taxable income minus other charitable contributions otherwise allowed under section 170(b)(2), with the same 5-year carryforward. The section also allows individuals to claim the affected deduction above the line by increasing the standard deduction under section 63 by the amount of the otherwise allowable charitable contribution deduction, and it prevents the alternative minimum tax adjustment under section 56(b)(1)(D) from applying to that increase. In addition, the section permits taxpayers to treat qualifying contributions paid after December 31, 2024, and on or before April 15, 2025, as if they were made on December 31, 2024, for tax year 2024. Qualified hurricane disaster contributions must be paid in cash between the first day of the incident period and December 31, 2025, to an organization described in section 170(b)(1)(A), be used for hurricane relief, and be supported by a contemporaneous written acknowledgment; the section excludes contributions to supporting organizations under section 509(a)(3) and contributions to establish or maintain donor advised funds under section 4966(d)(2).

This section provides tax relief for qualified hurricane disaster distributions from retirement plans by (1) exempting them from the 10% additional tax under section 72(t) of the Internal Revenue Code, (2) limiting such distributions to $100,000 per individual for any taxable year, and (3) allowing an individual to recontribute the distribution to an eligible retirement plan within 3 years after receipt. It also requires recontributed amounts to be treated as eligible rollover distributions or IRA rollovers, as applicable, and spreads any income inclusion ratably over 3 taxable years unless the taxpayer elects otherwise. The section applies to distributions made on or after the first day of the incident period and before December 31, 2025, and treats these distributions as satisfying certain plan distribution, rollover, and withholding requirements. This section also provides that individuals who received a qualified distribution for a home purchase may recontribute the amount during the applicable period to an eligible retirement plan, with rules similar to those for hurricane disaster distribution recontributions.