The Federal Emergency Management Agency (FEMA) and IRS declared a qualified disaster for Texas severe storms, straight-line winds and flooding, postponing certain deadlines to Feb. 2, 2026, and creating opportunities for employers to provide tax-free qualified assistance to their employees.
Executive summary:
Employer assistance
FEMA’s disaster declaration activates section 139, which excludes qualified disaster relief payments from gross income. In addition, it permits employer-sponsored private foundations to provide assistance to related employees without violating the self-dealing rules. Moreover, it excepts certain “donor advised funds” from that definition, permitting advisors to recommend qualified disaster relief distributions to individuals.
Employers may also establish a leave-based charitable donation program under which employees can forgo leave and not recognize it in income, in exchange for employers making a donation to a section 170(c) charitable organization. The IRS must specifically authorize this relief for a disaster. As of the date of this publication, the IRS has not authorized such a program for the Texas storms.
Read RSM’s How employers can assist employees impacted by major disasters and Qualified disaster relief through charitable organizations for more information.
RSM contributors
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Lauren NowakowskiSenior Manager -
Amber SalottoManaging Director -
Michelle McCarthySenior Manager
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