The Working Families Disaster Tax Relief Act allows families affected by federally declared disasters to calculate their eligibility for two important tax credits using income from the previous year instead of the current year. This helps disaster-affected workers and families qualify for the Earned Income Tax Credit and the refundable portion of the Child Tax Credit when their current-year income has been disrupted by the disaster. The bill defines eligible taxpayers as those whose home or workplace was located in a federally designated disaster zone during the disaster period, or those who were displaced from their home as a result of the disaster. The tax relief applies to anyone in an area where the President declared a major disaster under federal emergency assistance law. The changes take effect for tax years beginning after December 31, 2024, giving workers and families a valuable option to claim credits based on their pre-disaster earning capacity when their income has been temporarily reduced.
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