Disaster Reforestation Act
- Bill Number
- H.R. 262
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-01-09: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-04-22T08:06:48Z
AI-Generated Summary
Purpose
The Disaster Reforestation Act (H.R. 262) aims to help timber owners recover financially from certain disasters by allowing them to deduct the full economic value of lost uncut timber on their federal income taxes, rather than being limited to the timber's original cost basis (the amount originally paid for it). It encourages reforestation to restore forests after losses from events like fires, storms, or droughts.
Key Provisions
- Special Deduction Rule: For losses of uncut timber due to fire, storm, theft, wood-destroying insects, invasive species, or severe drought, the deduction is based on the timber's appraised fair market value immediately before the loss, minus any salvage value (what can be recovered from damaged timber). This applies only to timber held for cutting and sale in an active trade or business (not a passive investment, as defined under tax rules in Section 469 of the Internal Revenue Code).
- Appraisal Requirements:
- The appraisal must follow the Uniform Standards of Professional Appraisal Practice (USPAP, a set of professional guidelines for valuing property), focus only on the lost timber's value, and be done by a federally or state-certified appraiser.
- It must be completed no later than one year after the loss.
- Handling Delays in Appraisal: If an appraisal can't be finished before filing the tax return for the year of the loss, taxpayers can use an estimate on the original return and later file an amended return to adjust their taxable income based on the final appraisal.
- Inclusion of Pre-Merchantable Timber: The rule covers young timber not yet ready for commercial harvest.
- Reforestation Mandate: To qualify for the deduction, the lost timber area must be reforested (by planting, seeding, or preparing the site with hardwoods, softwoods, or a mix) within five years of the loss. Failure to do so triggers recapture rules, where the tax benefit must be repaid through IRS regulations.
- Effective Date: Applies to losses in tax years starting after the bill's enactment.
Significant Changes to Existing Law
This bill amends Section 165(b) of the Internal Revenue Code of 1986, which currently limits casualty loss deductions to the property's adjusted basis (typically the original cost, adjusted for things like depreciation). For standing uncut timber, this basis is often very low compared to its market value, making full recovery difficult. The new special rule introduces an exception allowing deductions based on appraised market value for qualifying timber losses, with added safeguards like appraisal standards, reforestation requirements, and recapture to prevent abuse.
Potential Impacts
- On Citizens and Businesses: Timber owners in disaster-prone areas (e.g., from wildfires or hurricanes) could claim larger tax deductions, reducing their financial burden and aiding business recovery. This might encourage more investment in forestry by making disaster recovery more predictable.
- On Government Agencies: The IRS will need to develop regulations for recapture, verify appraisals, and process amended returns, potentially increasing administrative workload but supporting economic recovery in rural and forested regions.
- On the Environment and International Relations: By requiring reforestation, the law promotes sustainable forest management and carbon sequestration, benefiting ecosystems. It has no direct international effects but could indirectly support U.S. timber exports by stabilizing domestic supply.
- Broader Economic Effects: Could lower tax liabilities for affected landowners, freeing up funds for replanting and stimulating local economies in agriculture and forestry sectors.
Main Stakeholders Affected
- Timber Industry Owners and Operators: Primary beneficiaries, especially small to mid-sized forest landowners who face frequent casualty risks.
- Appraisers and Foresters: Increased demand for certified appraisals and reforestation services.
- Internal Revenue Service (IRS): Responsible for enforcing rules, including recapture and amendments.
- Environmental and Conservation Groups: Indirectly affected through reforestation mandates that aid biodiversity and climate goals.
- Taxpayers in Disaster Areas: Rural communities in states like Georgia (where sponsors are from) that rely on timber production.
Notable Legal, Constitutional, or Political Implications
- Legal Implications: Introduces precise tax deduction mechanisms with built-in compliance (e.g., appraisals and recapture), reducing disputes over loss valuations but requiring IRS rulemaking to implement. It aligns with existing casualty loss rules while carving out a targeted exception, potentially setting precedent for other natural resource industries.
- Constitutional Implications: None significant; it involves standard congressional authority over taxation under Article I, Section 8 of the U.S. Constitution, without infringing on rights or federalism.
- Political Implications: Bipartisan sponsorship (Republican from Georgia and Democrat from Alabama) highlights cross-party support for disaster relief in agriculture-heavy regions. It addresses climate-related risks like wildfires and droughts without broader tax reforms, positioning it as a niche, practical response to environmental challenges.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Carter, Earl L. "Buddy" [R-GA-1]
Cosponsors (25)
Rep. Sewell, Terri A. [D-AL-7], Rep. Guest, Michael [R-MS-3], Rep. Sessions, Pete [R-TX-17], Rep. Rouzer, David [R-NC-7], Rep. Rogers, Mike D. [R-AL-3], Rep. Collins, Mike [R-GA-10], Rep. Westerman, Bruce [R-AR-4], Rep. Scott, Austin [R-GA-8], Rep. Letlow, Julia [R-LA-5], Rep. Lawler, Michael [R-NY-17], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Moore, Barry [R-AL-1], Rep. Allen, Rick W. [R-GA-12], Rep. Jack, Brian [R-GA-3], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Perez, Marie Gluesenkamp [D-WA-3], Rep. Huffman, Jared [D-CA-2], Rep. Panetta, Jimmy [D-CA-19], Rep. Bishop, Sanford D. [D-GA-2], Rep. Rutherford, John H. [R-FL-5], Rep. Pingree, Chellie [D-ME-1], Rep. Edwards, Chuck [R-NC-11], Rep. Bergman, Jack [R-MI-1], Rep. Murphy, Gregory F. [R-NC-3], Rep. Moran, Nathaniel [R-TX-1]
Recent Actions
- 2025-01-09: Referred to the House Committee on Ways and Means.
- 2025-01-09: Introduced in House
- 2025-01-09: Introduced in House
Bill Versions
- Disaster Reforestation Act — issued 2025-01-09 — PDF (6 pages)