After the historic blizzards and flooding rolled through Nebraska and devastated our communities, we’ve heard countless stories of neighbor helping neighbor, and donations and help pouring in from across the country for our hurting communities, farms, and businesses.
I have been working hard in Congress to provide our state with relief — and I am proud to introduce legislation that would give a hand up to individuals and businesses.
Recently, along with U.S. Rep. Adrian Smith, I introduced the Disaster Tax Relief Act. This bicameral, bipartisan measure would deliver much-needed tax benefits to communities that were recently designated as “disaster areas.”
I’d like Nebraskans to know some of the specifics of what the Disaster Tax Relief Act would do and what it would mean for our citizens and businesses impacted by the catastrophic weather conditions.
This legislation lifts regulations for the use of retirement funds. Currently, those who make early withdrawals from their retirement accounts are charged with a 10% penalty. But as we have seen in the wake of the severe weather, many Nebraskans are forced to dip into their retirement funds to restore their home or rebuild their farm or business. This bill would waive the 10 percent early withdrawal fee for those affected. Plunging into hard-earned retirement savings is disheartening on its own; Nebraskans should not be penalized in the process of putting the pieces back together.
The Disaster Tax Relief Act would also temporarily eliminate the cap on deductions for charitable donations within a disaster area. Charitable deductions are normally capped around 30 to 50% of income. Without these limitations in place, this legislation can provide even more incentive for donations to Nebraska communities that need the most assistance.
Usually the IRS offers a limited deduction for destroyed property. This bill would expand the deduction so it can be claimed for damages not covered by other insurance or federal programs.
Targeted changes to the Earned Income Tax Credit in the bill would help alleviate financial pressures some of our friends and neighbors are facing. EITC recipients generally receive credit based on the amount of money they have earned, but as floods have caused our businesses to halt operations, wages could fall. This bill would allow affected Nebraskans to claim their previous year’s credit if their wages decrease.
This legislation would help families keep a steadier stream of income as they recover. A tax credit would be made available for employers in disaster areas who continue to pay their employees. In some cases, this would give businesses the flexibility to continue paying their workers while they recover.
The bottom line is this: The Disaster Tax Relief Act offers more flexibility and frees Nebraskans from regulations, so they can make the right decisions for themselves and their loved ones as they recover.
Nebraskans are strong and tough. Day by day we are reopening doors and restoring our communities in the Good Life. I believe this common-sense tax relief measure would only help to speed up the process of getting back on our feet.
The passage of the Disaster Tax Relief Act would be an important step in the right direction. I will continue to fight to ensure that Congress quickly enacts this bill into law to lighten the load for our hurting families.