My North Carolina home was hit hard by Hurricane Helene, resulting in $78,000 in damages — can I deduct those big losses on my 2025 tax return?

The Internal Revenue Service (IRS) has already moved to give storm victims longer to file their taxes in 2025. The agency announced in October that taxpayers in the state who were affected by the storm now have until May 1, 2025 to file their federal tax returns. For affected residents, it was a small slice of good news.

But as an example, let’s say your home took a serious hit and the bill for damages has reached $78,000. If insurance only covers part of it, you might be left wondering if the remaining $30,000 can be written off on your tax return.

With rising disasters and financial fallout becoming more common, knowing whether you can recover some costs through tax deductions is crucial.

Can you deduct disaster losses?

The IRS allows deductions for certain disaster-related losses, but there are strict qualifications.

First, the damage must result from a federally declared disaster, and Hurricane Helene qualifies. This means losses tied to unexpected, sudden events like hurricanes, floods, or fires may be eligible. Gradual wear and tear or damage due to negligence, however, won’t make the cut.

According to the IRS, to deduct your losses, they must exceed your insurance reimbursement.

For example, if you suffered $78,000 in damages but received $48,000 from your insurer, only the uncovered $30,000 can be considered. You’ll also owe the IRS a share, depending on whether your losses can be attributed to a federally declared disaster.

Homeowners who suffered losses due to federally declared disasters — like Hurricane Helene — would be subject to a deductible of $100 per casualty and a reduction equivalent to 10% of the claimant’s adjusted gross income (AGI). In the situation where your damage is the result of a qualified disaster loss, you won’t be subject to the 10% reduction, but the deductible raises to $500.

For a taxpayer with an AGI of $75,000, this would mean deducting $7,600 ($100 + 10% of $75,000), leaving $22,400 as potentially deductible.

While the math can be daunting, it’s important to remember that this is a federal effort to ease the financial strain of disasters, albeit with limitations. Deductible losses don’t include luxury upgrades during repairs or temporary relocation expenses.

Filing extensions for Hurricane Helene victims

Even if your losses don’t qualify for a full deduction, there’s some relief for those recovering from Hurricane Helene. The IRS has extended key tax deadlines for disaster-affected residents, pushing various 2024 filings and payments to May 1, 2025.

This includes individual and business tax returns, estimated payments, and retirement contributions. For those juggling post-disaster repairs, this extension provides breathing room to manage both finances and recovery efforts.

Steps to claim a casualty loss deduction

Navigating the process of claiming a casualty loss deduction requires attention to detail. Start by documenting all related expenses thoroughly. This includes repair estimates, receipts, photos of the damage, and insurance claim records. These will substantiate your claim and are invaluable in case of an audit.