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If you’ve ever had a job site hit by a flood, wildfire, or storm — you know the physical damage can be devastating. But here’s something most contractors don’t know: the IRS makes it tough to get a tax break for personal casualty or theft losses… and the OBBBA didn’t change that much.

If you’ve ever had a job site hit by a flood, wildfire, or storm — you know the physical damage can be devastating. But here’s something most contractors don’t know: the IRS makes it tough to get a tax break for personal casualty or theft losses… and the OBBBA didn’t change that much.

Here’s the breakdown 👇

🔸 Bad news first:Until 2026, you can only deduct a personal casualty loss (like a fire or theft) if it’s part of a federally declared disaster.Even then, you have to reduce the loss by $100 and 10% of your adjusted gross income (AGI). For most, that wipes out smaller claims completely.

🔸 The small win:Starting in 2026, state-declared disasters will count too. So, if your property or equipment is damaged in a disaster declared by your state governor — you’ll finally be eligible for the same federal tax deduction treatment.

🔸 Business losses are different — and better.If your construction equipment, tools, or vehicles used for business are stolen or destroyed, those losses are fully deductible. No $100 reduction. No 10% of AGI rule. No need for a federal disaster declaration.

That’s the real takeaway for contractors — keep your losses classified correctly. Personal casualty losses are limited, but business losses get full tax relief.

Disclaimer: This content is provided for educational purposes only and is not legal, tax, accounting, or financial advice. Every situation is unique, so consult your own attorney, CPA, or financial advisor before making decisions based on this information.