Casualty loss deduction expanded and made permanent

Under The One Big Beautiful Bill Act (P.L. 119-21), the deduction for certain personal casualty losses has been made permanent, and beginning in 2026, the scope of eligible losses is expanded. For purposes of Form 1040-C PDF and its instructions PDF, this means that a personal casualty loss deduction is no longer limited solely to losses attributable to federally declared disasters; it may also include losses resulting from state-declared disasters, provided all other requirements under Internal Revenue Code §165 are satisfied.