If you’re unlucky enough to suffer a personal casualty or theft loss from a wildfire, flood, earthquake, or whatever, you may be entitled to a federal income tax deduction. Or not.

We will explain how the deduction works and also cover some good news from the One Big Beautiful Bill Act (OBBBA).

Claiming Itemized Deductions for Personal Casualty Losses

In theory, you are allowed to claim an itemized federal income tax deduction for personal casualty losses that are not covered by insurance.1 But you must clear some hurdles to snag any write-off. That’s not always possible.

For 2018-2025, personal casualty loss deductions are allowed only when the loss is due to a “federally declared disaster.”2 A federally declared disaster is any disaster determined by the president of the United States to warrant assistance by the federal government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.3

Then, as explained below, two subtractions must be taken into account when calculating your allowable deduction, if ... Log in to view full article.