Tax Fairness for Disaster Victims Act

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3975 Introduced in House (IH)]

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119th CONGRESS
  1st Session
                                H. R. 3975

 To amend the Internal Revenue Code of 1986 to provide a lookback rule 
in the case of certain federally declared disasters for amounts related 
   to earned income for purposes of determining certain tax credits.


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                    IN THE HOUSE OF REPRESENTATIVES

                             June 12, 2025

 Mr. Kennedy of New York (for himself, Mr. Huffman, Ms. Barragan, Ms. 
Norton, Mr. Neguse, Ms. Tokuda, Ms. Tlaib, and Ms. Chu) introduced the 
 following bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide a lookback rule 
in the case of certain federally declared disasters for amounts related 
   to earned income for purposes of determining certain tax credits.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Fairness for Disaster Victims 
Act''.

SEC. 2. LOOKBACK RULE IN CASE OF CERTAIN FEDERALLY DECLARED DISASTERS 
              FOR AMOUNTS RELATED TO EARNED INCOME FOR PURPOSES OF 
              DETERMINING CERTAIN TAX CREDITS.

    (a) In General.--Section 32 of the Internal Revenue Code of 1986 is 
amended by inserting after subsection (f) the following new subsection:
    ``(g) Lookback Rule for Determining Amounts Related to Earned 
Income in Case of Certain Federally Declared Disasters.--
            ``(1) In general.--In the case of a qualified individual 
        who elects the application of this subsection (at such time and 
        in such manner as the Secretary may provide)--
                    ``(A) if the earned income of the taxpayer for the 
                taxable year which includes the applicable date is less 
                than the earned income of the taxpayer for the 
                preceding taxable year, the credits allowed under this 
                section and section 24(d) shall be determined by 
                substituting--
                            ``(i) such earned income for the preceding 
                        taxable year, for
                            ``(ii) such earned income for the taxable 
                        year which includes the applicable date, and
                    ``(B) if the social security taxes of the taxpayer 
                for the taxable year which includes the applicable date 
                is less than the social security taxes of the taxpayer 
                for the preceding taxable year, the credit allowed 
                under section 24(d) shall be determined by 
                substituting--
                            ``(i) such social security taxes for the 
                        preceding taxable year, for
                            ``(ii) such social security taxes for the 
                        taxable year which includes the applicable 
                        date.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Qualified individual.--The term `qualified 
                individual' means any individual whose principal place 
                of abode on the applicable date was located in a 
                disaster area with respect to a federally declared 
                disaster.
                    ``(B) Applicable date.--The term `applicable date' 
                means, with respect to any federally declared disaster, 
                the first day of the period specified by the Federal 
                Emergency Management Agency as the period during which 
                such disaster occurred.
                    ``(C) Federally declared disaster; disaster area.--
                The terms `federally declared disaster' and `disaster' 
                have the respective meanings given such terms by 
                section 165(i)(5).
                    ``(D) Social security taxes.--The term `social 
                security taxes' has the meaning given such term by 
                section 24(d)(2).
            ``(3) Application to joint returns.--For purposes of 
        paragraph (1), in the case of a joint return--
                    ``(A) such paragraph shall apply if either spouse 
                is a qualified individual,
                    ``(B) the earned income of the taxpayer for the 
                preceding taxable year shall be the sum of the earned 
                income of each spouse for such preceding taxable year, 
                and
                    ``(C) the social security taxes of the taxpayer for 
                the preceding taxable year shall be the sum of the 
                social security taxes of each spouse for such preceding 
                taxable year.
            ``(4) Uniform application of election.--Any election made 
        under paragraph (1) shall apply for all purposes of paragraph 
        (1).
            ``(5) No effect on determination of gross income, etc.--
        Except as otherwise provided in this subsection, this title 
        shall be applied without regard to any substitution under 
        paragraph (1).''.
    (b) Treatment as Mathematical or Clerical Errors.--Section 
6213(g)(2) of such Code is amended by striking ``and'' at the end of 
subparagraph (U), by striking the period at the end of subparagraph (V) 
and inserting ``, and'', and by inserting after subparagraph (V) the 
following new subparagraph:
                    ``(W) an incorrect use of earned income or social 
                security taxes pursuant to section 32(g).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to determinations of earned income and social security taxes for 
taxable years beginning after the date of the enactment of this Act.
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