Hurricane Debby made landfall in Florida on August 5, 2024, as a Category 1 storm, and weakened to a post-tropical cyclone as it moved along the east coast.

Flooding and power outages hit people hard – even in landlocked Vermont. While coastal states are often hardest hit after a hurricane, inland states can be affected too. That’s the case here, where strong winds and heavy rains led to power outages for tens of thousands of Vermonters.

For this reason, the IRS has announced tax relief for individuals and businesses affected by Hurricane Debby in Vermont.

Vermont is the fifth state to receive tax relief in connection with Hurricane Debby – the IRS had previously announced relief for counties in Florida, Georgia, North Carolina and South Carolina.

Affected taxpayers

The IRS is offering assistance to all areas designated by the Federal Emergency Management Agency (FEMA), which includes all 14 counties in Vermont.

The same assistance will be available to other counties and states that are later added to the disaster area. The current list of eligible localities is always available on the Disaster Tax Relief page on IRS.gov.

These taxpayers now have until February 3, 2025, to file various federal individual and business tax returns and make tax payments.

Facilitating filing and payment

The tax relief will postpone various tax filing and payment deadlines in Vermont beginning on August 18, 2024, and continuing through February 3, 2025. This means that affected individuals and businesses in these areas will have until February 3, 2025, to file their tax returns and pay any taxes originally due during that period.

The new deadline of February 3, 2025, applies to individuals with a valid extension to file their 2023 tax return until October 15, 2024. However, because tax payments for the 2023 tax return were due on April 15, 2024, those payments are not eligible for the reduction. This means the IRS is giving taxpayers more time to file, not pay.

However, the IRS is giving individual taxpayers more time to pay their quarterly income tax prepayments, which are normally due on September 16, 2024 and January 15, 2025.

Companies are also entitled to relief. This includes companies that typically file quarterly payroll and consumption tax returns on October 31, 2024 and January 31, 2025.

In addition, for Vermont taxpayers, penalties for failure to pay payroll and use tax deposits due on or after August 18, 2024, and before August 23, 2024, will be reduced as long as the deposits are made by August 23, 2024.

Please see the Disaster Relief and Emergency Assistance for Individuals and Businesses page for details of other tax returns, payments and tax-related measures that may be eligible for assistance during the deferral period.

How to get relief

Most taxpayers do not need to take any action to receive assistance. The IRS automatically provides filing and penalty relief to taxpayers with an IRS-registered address in the disaster area.

It’s possible that an affected taxpayer doesn’t have an IRS address in the disaster area — for example, maybe you moved. If you’re eligible for relief but receive a late filing or late payment notice from the IRS, you should call the number on the notice to have the notice dismissed.

The IRS will work with any taxpayer who lives outside the disaster area but whose documentation is required to meet a deadline during the deferral period and who is in the affected area. This includes relief workers who belong to a recognized government or philanthropic organization. These taxpayers should contact the IRS at 1.866.562.5227.

Tax preparers in disaster areas with clients outside the disaster area may use the Bulk Requests from Practitioners for Disaster Assistance option described on IRS.gov.

Deductions for accidental losses

Because of the Tax Cuts and Jobs Act, most taxpayers cannot deduct casualty losses. However, individuals and businesses located in a federally declared disaster area are eligible for the deduction.

You can claim a deduction for casualty losses either on the tax return for the year in which the loss occurred (that is the 2024 tax return filed in 2025 for losses due to Hurricane Debby) or on the tax return for the previous year (that is the 2023 tax return, which is normally filed in 2024).

Taxpayers have up to six months after the due date of their income tax return for the disaster year (not counting any extension of time to file) to make the election—which is October 15, 2025.

Include the FEMA declaration number (3609-EM for Vermont) on each loss report.

Aid payments

Qualified disaster relief payments are generally excluded from gross income. This means that affected taxpayers can deduct funds received from a government agency for reasonable and necessary personal, family, living, or funeral expenses—as well as for repairing or rehabilitating their home or repairing or replacing its contents—from their gross income.

Affected taxpayers who participate in a retirement plan or IRA may be able to receive additional relief. For example, a taxpayer may be eligible for a special disaster distribution without the additional 10 percent tax on early distributions, allowing the taxpayer to spread the income over three years. Taxpayers may also be eligible for a hardship distribution. Each plan or IRA has specific rules and guidelines that participants must follow, so ask your plan administrator for more information.

More information

Visit the IRS Disaster Relief and Emergency Assistance for Individuals and Businesses page for details on other tax returns, payments and tax-related actions that may be eligible for assistance during the deferral period.