On September 17th, 2025, the IRS announced tax relief for individuals and businesses in areas of Wisconsin affected by severe storms in August.
Many Wisconsin families were impacted by the severe storms, winds, flooding and mudslides that took place beginning on August 9, 2025. As of September 11, 2025, the Trump administration has approved Governor Evers’ request for a major disaster declaration for those impacted in Milwaukee, Waukesha and Washington counties. If you live in one of the previously listed areas, and you were impacted by the storms, below are the tax-related emergency relief items you need to know.
Who Qualifies for Relief?
Relief applies to individuals and businesses whose principal residence or business is in a Wisconsin county declared a disaster area by the state and who sustained an economic loss as a result.
When is the Disaster Period?
The disaster period covers August 1 through October 10th, 2025.
The Disaster period begins 10 days before a declared state of emergency (i.e., the declaration date was August 11, 2025) and ends 60 days after the declared state of emergency.
Filing Extensions: More Time to File and Pay
Taxpayers who live in these declared disaster areas automatically receive a 120-day extension for federal tax filings and payments originally due within the disaster period. This extension applies to individual, business and other state filings. No separate extension is needed if your principal residence is within the designated disaster areas. No action is needed, just be sure to adjust your compliance calendar accordingly to make sure these payments and returns are filed before the end of the 120-day extension period.
Automatic Abatement for Penalties
If you file or pay late due to the disaster, penalties will automatically be abated if you meet the extended deadline. If you receive a penalty notice for the period covered by the disaster relief period, you can request an abatement. If you receive a penalty notice, please contact your Wegner tax advisor for guidance.
Expanded Eligibility of Casualty Loss Deduction
Beginning in 2026, you can claim personal casualty losses for state-declared disasters. You will also be able to elect to claim the losses on either the current year or prior year’s return, which could accelerate your refund. Be sure to diligently document all disaster related property or business losses and consult your tax advisor whether it’s beneficial to amend the prior year’s returns for these losses.
Non-Taxable Qualified Disaster Relief Payments
Any payments you receive from government agencies for personal, family or home- related disaster expenses are generally excluded from taxable income, provided those expenses are not covered by insurance. Be sure to keep all documentation or relief payments and the expenses they cover for your records.
Retirement Plan Relief: Flexible Options
Special rules apply for disaster- related retirement plan distributions:
- The penalty of 10% for early withdrawal is waived
- You can spready the income from these distributions over 3 years
- You may recontribute the amounts withdrawn within 3 years to avoid taxation
If you do need access to retirement funds due to disaster- related expenses, please consult your tax advisor to ensure qualification and maximum relief.
Action Steps for Impacted Taxpayers
- Review all tax filings and payments due during the disaster period
- Maintain thorough records of all disaster related losses, relief payments and retirement plan transactions
- Consider amending prior year returns if it accelerates your tax benefit
- Contact your tax advisor immediately if you receive any penalty notices.
- Stay informed of additional updates or relief measures
Please contact your Wegner CPAs tax advisor if for help with any disaster relief tax questions you may have.
