Relief for Texas Taxpayers Impacted by 2025 Floods

The Federal Emergency Management Agency (FEMA) has issued disaster declarations covering individuals who live or have a business in counties affected by severe storms and flooding in Texas during March and July 2025. Additionally, the Internal Revenue Service (IRS) announced tax relief for affected individuals and businesses in these areas.

Who Qualifies for Relief?

If you qualify for relief, you have additional time to file returns, pay taxes, and perform other time-sensitive acts that are originally due during the relief periods. Eligible taxpayers include the following:

• Individuals who live in affected counties,
• Businesses with a principal place of business in the covered area,
• Others whose records for reporting deadlines are in the covered area,
• Relief workers affiliated with a recognized government or charitable organization who are helping with relief activities in affected counties, and
• Individuals killed or injured because of the disaster.

Individuals, households, and businesses affected by severe storms and flooding that began on March 26, 2025, in the following counties are eligible for tax relief.

• Cameron
• Hidalgo
• Starr
• Willacy

Those in the following counties affected by the severe storms and flooding that began on July 2, 2025, also qualify under a separate disaster declaration.

• Burnet
• Kendall
• Kerr
• Kimble
• Menard
• San Saba
• Tom Green
• Travis
• Williamson

What Relief Did the IRS Grant?

Although the IRS announced similar relief for both disasters, the timing and specific extensions vary.

If the March 2025 disaster declaration affects you, you have until November 3, 2025, to file most returns and pay most taxes due after March 26 and before November 3. The extended deadline also applies to 2024 contributions to IRAs and health savings accounts for eligible taxpayers. Estimated tax payments due in this period are also due November 3. Employment and excise tax deposits due after March 26 and before April 10 will be considered timely if paid by April 10, 2025.

Individuals and calendar-year partnerships, S corporations, C corporations, and tax-exempt organizations affected by the July 2025 storms and flooding are granted a time extension until February 2, 2026, to file most income, payroll, and excise returns due between July 2, 2025, and February 2, 2026. The extension also covers 2025 quarterly estimated tax payments due before February 2, but does not delay the time to pay balances due on 2024 tax returns extended in spring 2025.

How Do You Claim Casualty Losses?

You may deduct casualty and theft losses from federally declared disasters. There are three broad categories of allowed casualty losses, and each qualifies for different tax treatment.

Individuals who experience a qualified disaster loss of personal-use property may claim a casualty loss deduction, elect to claim the loss in the preceding tax year, and deduct the loss without itemizing. Only certain Presidentially declared major disasters occurring before September 2, 2025, qualify. This category provides the greatest deduction. Qualified disaster losses that exceed $500 are deductible, and the 10% of AGI threshold does not apply.

Disaster losses that occur in a county eligible for federal government assistance due to a Presidential declaration generate broader deductions. Individuals, corporations, S corporations, and partnerships may claim a casualty loss deduction for personal-use, business, and income-producing property. Additionally, you may elect to deduct the loss on the original or amended tax return for the year preceding the loss, which could help provide much-needed cash flow.

Individuals who experience a qualified disaster loss of personal-use property may claim a casualty loss deduction, elect to claim the loss in the preceding tax year, and deduct the loss without itemizing. Only certain Presidentially declared major disasters occurring before September 2, 2025, qualify. This category provides the greatest deduction. Qualified disaster losses that exceed $500 are deductible, and the 10%-of-AGI threshold does not apply.

Your CRI Professional Can Help Navigate Reporting Challenges!

For Texans impacted by the 2025 floods, key federal disaster relief provisions and casualty loss deductions may help offset recovery costs. As with many areas of tax law, IRS guidance can be complex and difficult to interpret. But you don’t have to figure it out on your own. Contact your CRI advisor today to discuss your options. We’re here to support you every step of the way through these challenging times.