Casualty: Disaster and Theft Tax Relief (2025 IRS Guide)

This guide covers “Casualty” within disaster and theft tax relief. The following material presents the IRS treatment of this topic, including the qualifications, exceptions, and examples in the source section. Read the rules alongside the facts of your own situation before deciding what to report, deduct, or document.

Adapted from Publication 547 (2025), Casualties, Disasters, and Thefts, published by the Internal Revenue Service. This guide retains the source edition’s years, amounts, deadlines, and examples. It is guidance for that edition, not a statement that the same figures apply to every tax year.

Casualty

A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual.

• A sudden event is one that is swift, not gradual or progressive.

• An unexpected event is one that is ordinarily unanticipated and unintended.

• An unusual event is one that isn’t a day-to-day occurrence and that isn’t typical of the activity in which you were engaged.

Casualty losses not compensated for by insurance are deductible during the tax year that the loss is sustained. This is generally the tax year that the loss occurred. However, a casualty loss may be sustained in a year after the casualty occurred. See When To Report Gains and Losses and Table 3, later.

Definitions.

Three specific types of casualty losses are described in this publication.

1. Federal casualty losses.

2. Disaster losses.

3. Qualified disaster losses.

All three types of losses refer to federally declared disasters, but the requirements for each loss vary. A federally declared disaster is a disaster determined by the President of the United States to warrant assistance by the federal government under the Stafford Act. A federally declared disaster includes (a) a major disaster declaration or (b) an emergency declaration under the Stafford Act.

Federal casualty loss.

A federal casualty loss is an individual’s casualty or theft loss of personal-use property that is attributable to a federally declared disaster. The casualty loss must occur in a state receiving a federal disaster declaration. If you suffered a federal casualty loss, you are eligible to claim a casualty loss deduction. If you suffered a casualty or theft loss of personal-use property that wasn’t attributable to a federally declared disaster, it isn’t a federal casualty loss, and you may not claim a casualty loss deduction unless the exception applies. Theft losses incurred in a transaction entered into for profit may still be deductible. See the Caution under Deductible losses, later.

Disaster loss.

A disaster loss is a loss that is attributable to a federally declared disaster and that occurs in an area eligible for assistance pursuant to the Presidential declaration. The disaster loss must occur in a county eligible for public or individual assistance (or both). Disaster losses aren’t limited to individual personal-use property and may be claimed for individual business or income-producing property and by corporations, S corporations, and partnerships. If you suffered a disaster loss, you are eligible to claim a casualty loss deduction and to elect to claim the loss in the preceding tax year. See Disaster Area Losses, later.

Qualified disaster loss.

A qualified disaster loss includes an individual’s casualty and theft loss of personal-use property that is attributable to:

• A major disaster declared by the President under section 401 of the Stafford Act in 2016;

• Hurricane Harvey;

• Tropical Storm Harvey;

• Hurricane Irma;

• Hurricane Maria;

• The California wildfires in 2017 and January 2018;

• A major disaster that was declared by the President under section 401 of the Stafford Act and that occurred in 2018 and before December 21, 2019, and continued no later than January 19, 2020 (except those attributable to the California wildfires in January 2018 that received prior relief); and

• A major disaster that was declared by the President during the period between January 1, 2020, and September 2, 2025. Also, this disaster must have an incident period that began on or after December 28, 2019, and on or before July 4, 2025, and must have ended no later than August 3, 2025.

Note:

The definition of a qualified disaster loss does not extend to any major disaster that has been declared only by reason of COVID-19.

If you suffered a qualified disaster loss, you are eligible to claim a casualty loss deduction, to elect to claim the loss in the preceding tax year, and to deduct the loss without itemizing other deductions on Schedule A (Form 1040).

Go to IRS.gov/DisasterTaxRelief for date-specific declarations associated with these disasters and for more information.

Deductible losses.

For tax years beginning after 2017, if you are an individual, casualty losses of personal-use property are deductible only if the loss is attributable to a federally declared disaster (federal casualty loss). Personal-use property is other than business property or income-producing property. If the event causing you to suffer a personal casualty loss (not attributed to a federally declared disaster) occurred before January 1, 2018, but the casualty loss wasn’t sustained until January 1, 2018, or later, the casualty loss isn’t deductible. See When To Report Gains and Losses, later, for more information on when a casualty loss is sustained.

Example.

As a result of a storm, a tree fell on your house in December 2023, and you suffered $5,000 in damage. The President didn’t declare the storm a federally declared disaster. You filed a claim with your insurance company and reasonably expected the entire amount of the claim to be covered by your insurance company. In January 2025, your insurance company paid you $3,000 and determined it didn’t owe you the remaining $2,000 from your claim. The $2,000 personal casualty loss is sustained in 2025 even though the storm occurred in 2023. Because the $2,000 isn’t a federal casualty loss, it isn’t deductible as a casualty loss under the current limitations.

Caution:

An exception to the rule limiting the deduction for personal casualty and theft losses to federal casualty losses applies where you have personal casualty gains. In this case, you may deduct personal casualty losses that aren’t attributable to a federally declared disaster to the extent they don’t exceed your personal casualty gains.

Casualty losses can result from a number of different causes, including the following.

• Car accidents (but see Nondeductible losses next for exceptions).

• Earthquakes.

• Fires (but see Nondeductible losses next for exceptions).

• Floods.

• Government-ordered demolition or relocation of a home that is unsafe to use because of a disaster as discussed under Disaster Area Losses, later.

• Mine cave-ins.

• Shipwrecks.

• Sonic booms.

• Storms, including hurricanes and tornadoes.

• Terrorist attacks.

• Vandalism.

• Volcanic eruptions.

Nondeductible losses.

A casualty loss isn’t deductible, even to the extent the loss doesn’t exceed your personal casualty gains, if the damage or destruction is caused by the following.

• Accidentally breaking articles such as glassware or china under normal conditions.

• A family pet (explained below).

• A fire if you willfully set it or pay someone else to set it.

• A car accident if your willful negligence or willful act caused it. The same is true if the willful act or willful negligence of someone acting for you caused the accident.

• Progressive deterioration (explained below). However, see Special Procedure for Damage From Corrosive Drywall, later.

Family pet.

Loss of property due to damage by a family pet isn’t deductible as a casualty loss unless the requirements discussed earlier under Casualty are met.

Example.

Your antique oriental rug was damaged by your new puppy before it was housebroken. Because the damage wasn’t unexpected and unusual, the loss isn’t deductible as a casualty loss.

Progressive deterioration.

Loss of property due to progressive deterioration isn’t deductible as a casualty loss. This is because the damage results from a steadily operating cause or a normal process rather than from a sudden event. The following are examples of damage due to progressive deterioration.

• The steady weakening of a building due to normal wind and weather conditions.

• The deterioration and damage to a water heater that bursts. However, the rust and water damage to rugs and drapes caused by the bursting of a water heater does qualify as a casualty.

• Most losses of property caused by droughts. To be deductible, a drought-related loss must generally be incurred in a trade or business or in a transaction entered into for profit.

• Termite or moth damage.

• The damage or destruction of trees, shrubs, or other plants by a fungus, disease, insects, worms, or similar pests. However, a sudden destruction due to an unexpected or unusual infestation of beetles or other insects may result in a casualty loss.

Special Procedure for Damage From Corrosive Drywall

Caution:

Because the personal casualty losses claimed under this special procedure aren’t attributable to a federally declared disaster, they’re only deductible to the extent such losses don’t exceed your personal casualty gains.

If you suffered property losses due to the effects of certain imported drywall installed in homes between 2001 and 2009, under a special procedure, you can deduct the amounts you paid to repair damage to your home and household appliances due to corrosive drywall. Under this procedure, you treat the amounts paid for repairs as a casualty loss in the year of payment. For example, amounts you paid for repairs in 2025 are deductible on your 2025 tax return and amounts you paid for repairs in 2024 are deductible on your 2024 tax return.

Note:

If you paid for any repairs before 2025 and you choose to follow this special procedure, you can amend your return for the earlier year by filing Form 1040-X, Amended U.S. Individual Income Tax Return, and attaching a completed Form 4684 for the appropriate year. Form 4684 for the appropriate year can be found at IRS.gov. Generally, Form 1040-X must be filed within 3 years after the date the original return was filed or within 2 years after the date the tax was paid, whichever is later.

Corrosive drywall.

For purposes of this special procedure, “corrosive drywall” means drywall that is identified as problem drywall under the two-step identification method published by the Consumer Product Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD) in their interim guidance dated January 28, 2010, as revised by the CPSC and HUD. The revised identification guidance and remediation guidelines are available at CPSC.gov/en/Safety-Education/Safety-Education-Centers/Drywall-Information-Center.

Special instructions for completing Form 4684.

If you choose to follow this special procedure, complete Form 4684, Section A, according to the instructions below. The IRS won’t challenge your treatment of damage resulting from corrosive drywall as a casualty loss if you determine and report the loss as explained below.

Top margin of Form 4684.

Enter “Revenue Procedure 2010-36.”

Line 1.

Enter the information required by the line 1 instructions.

Line 2.

Skip this line.

Line 3.

Enter the amount of insurance or other reimbursements you received (including through litigation). If none, enter -0-.

Lines 4–7.

Skip these lines.

Line 8.

Enter the amount you paid to repair the damage to your home and household appliances due to corrosive drywall. Enter only the amounts you paid to restore your home to the condition existing immediately before the damage. Don’t enter any amounts you paid for improvements or additions that increased the value of your home above its pre-loss value. If you replaced a household appliance instead of repairing it, enter the lesser of:

• The current cost to replace the original appliance, or

• The basis of the original appliance (generally its cost).

Line 9.

If line 8 is more than line 3, do one of the following.

1. If you have a pending claim for reimbursement (or you intend to pursue reimbursement), enter 75% of the difference between lines 3 and 8.

2. If item (1) doesn’t apply to you, enter the full amount of the difference between lines 3 and 8.

If line 8 is less than or equal to line 3, you can’t claim a casualty loss deduction using this special procedure.

Caution:

If you have a pending claim for reimbursement (or you intend to pursue reimbursement), you may have income or an additional deduction in a later tax year depending on the actual amount of reimbursement received. See Reimbursement Received After Deducting Loss, later.

Lines 10–18.

Complete these lines according to the Instructions for Form 4684.

Choosing not to follow this special procedure.

If you choose not to follow this special procedure, you are subject to all of the provisions that apply to the deductibility of casualty losses, and you must complete lines 1–9 according to the Instructions for Form 4684. This means, for example, that you must establish that the damage, destruction, or loss of property resulted from an identifiable event as defined earlier under Casualty. Furthermore, you must have proof that shows the following.

• The loss is properly deductible in the tax year you claimed it and not in some other year. See When To Report Gains and Losses, later.

• The amount of the claimed loss. See Proof of Loss, later.

• No claim for reimbursement of any portion of the loss exists for which there is a reasonable prospect of recovery. See When To Report Gains and Losses, later.

Using the guidance

Keep the documents that establish the dates, amounts, and circumstances described above. References to other chapters, forms, worksheets, or earlier and later sections refer to the linked IRS publication. Check the full publication and its updates before relying on a rule for a different tax year or a situation not addressed here.

Sources and further reading

• Publication 547 (2025), Casualties, Disasters, and Thefts: Casualty — Internal Revenue Service; 2025 edition.

The cited U.S. government text is in the public domain. Source accessed October 28, 2026. Fynoptic has organized this material for educational use and is independent of, and not endorsed by, the IRS.