Blog

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.