House, Senate Approve Tax Relief Bills for Katrina Victims

By Melanie Arter | July 7, 2008 | 8:22 PM EDT

( - The House and Senate Thursday passed almost identical bills providing tax relief in the wake of Hurricane Katrina, including emergency housing vouchers for $600 per month up to six months for displaced families, regardless of income.

The measures also allow those affected by the storm to write off more hurricane losses that wouldn't normally be reimbursed, waive penalties against early withdrawals from retirement accounts, and waive taxes imposed on mortgages that are forgiven.

The bills include another plan backed by two Illinois Democrats - Sen. Barack Obama and Rep. Rahm Emanuel - to immediately give earned income tax credits and child tax credits to families in the Gulf Coast - money that they would normally receive when they file taxes next year.

The Senate's tax relief bill included a modified version of Sen. John Kerry's (D-Mass.) Military Family Bill of Rights, which provides providing tax cuts to employers who pay National Guard and reservists that are called away to duty in Iraq, the Gulf Coast and elsewhere.

Kerry's plan would provide an employee retention credit for a 40 percent tax credit for wages paid up to $6,000 after Aug. 28, 2005 and before Dec. 31, 2005.

"Many reservists face a pay cut when called to active duty, and that can put a terrible financial strain on them and their families. Some employers have elected to do the right thing by easing that burden. I want more employers to make that patriotic effort, and this bill will help that," Kerry said.

"Where ever our reservists are serving, we should go the extra mile to help them and their families. This bill will help businesses in the Gulf Coast, who've been hard hit by Katrina, do just that," added Kerry.

"It is imperative that the House of Representatives does the right thing by including this provision in their bill, so we can quickly make this a reality for our military families," concluded Kerry.

Small business owners who take out Small Business Administration disaster loans will be able to put off paying them back for a year.

The Senate could vote this week on a bill to give Katrina victims temporary Medicaid, including mental health care.

Subscribe to the free daily E-Brief.

E-mail a comment or news tip to Melanie Hunter.

Send a Letter to the Editor about this article.