Following the overall natural disasters, the Internal Revenue Service (IRS) offered a postponed federal tax filing date of May 1, 2025, for Alabama and six other states, along with some counties in four other states. The relief provision targets to ease economic burdens placed on residents and businesses that were impacted by hurricanes, wildfires, and other crises. Whereas federal extension gives room for flexibility, discrepancy in the deadline to file federal and state tax comes at an increased burden of compliance, especially for states like Alabama with tighter deadlines at local levels.
The IRS disaster relief program provides automatic extensions to areas declared as disasters by the federal government. The May 1 deadline in tax year 2024 will be applicable to all federal income tax returns and payments for Alabama, Florida, Georgia, North Carolina, South Carolina, and sections of Alaska, New Mexico, Tennessee, and Virginia taxpayers. These states were severely affected by Hurricane Helene, wildfires, and floods, which displaced individuals and shut down businesses.
Eligible taxpayers who have to file include individuals, businesses, and self-employment taxpayers. The extension applies to January 15 quarterly estimated taxes due in 2025 and permits penalty-free postponement of IRA and HSA contributions. Note that relief is automatic—no extension forms need to be filed, and no call must be made to the IRS.
Alabama’s dual deadline problem
Alabama’s federal taxpayers are directly benefited by the IRS delay, with little change in state tax burden. The Alabama Department of Revenue (ALDOR) did not provide a blanket extension, however, and is acting on an individual basis instead. State returns may be filed under ALDOR’s normal six-month extension, but payments due must be made by the original April 15 due date unless waived individually.
This tension creates confusion. Homewood CPA Barry Dreayer stresses that “taxpayers must pay attention to federal May 1 deadlines but also comply with state deadlines to avoid penalties.” To small businesses like Skin Wellness Dermatology, relief from the federal government provides welcome liquidity. Clinic founder Dr. Corey Hartman tracked the unexpected advantage of the extension: “Financial planning is aided by the extra two months because it makes the recovery process smoother.” But ALDOR’s paltry relief places many Alabamians at the intersection of federal flexibility and state inflexibility.
Regional impacts: From hurricane zones to wildfire corridors
Outside of Alabama, the IRS extension reaches across other disaster zones:
- Florida and Georgia: Coastal towns ravaged by Hurricane Helene’s 120-mph winds and storm surges.
- North and South Carolina: Flooding in inland areas displaced more than 20,000 residents from their homes, destroying essential infrastructure.
- Alaska (Yakutat Borough): Ice melt-induced landslides cut off transportation networks.
- New Mexico (Colfax County): Wildfire recovery under extended drought conditions.
- Tennessee and Virginia: Individual counties are recovering due to flash floods.
These aggregated areas are more than 15% of U.S. GDP, expanding the extension’s economic impact. The Federal Emergency Management Agency (FEMA) puts disaster-related losses at $12 billion in affected areas.
Strategic recommendations for impacted taxpayers
- Make state payments first: Despite federal extensions, pay state tax obligations on April 15 unless special relief is provided. ALDOR’s case-by-case basis necessitates documented evidence of disaster impact to waive penalties.
- Make the most of federal deferrals: Leverage the additional six weeks to maximize deductions, like disaster loss claims under Section 165 of the IRS that can be used against 2024 income.
- Seek expert local advisors: Experts like Dreayer emphasize sophisticated compliance tactics, like partial payments to limit state interest accrual.
- Keep tabs on legislative action: States like South Carolina are weighing emergency sessions to bring deadlines in line with federal rules, according to the Tax Foundation’s live tracker.
Navigating a patchwork of deadlines
The IRS May 1 extension is a lifeline to disaster zones, but only when states act together. Alabama’s experience illustrates the difficulties of fractured federal and state tax systems, where taxpayers are forced to wade through contradictory deadlines in the aftermath of recovery. As climate disasters become more severe, policymakers are being forced to coordinate emergency tax provisions to provide streamlined assistance to vulnerable populations. For the time being, caution and forward thinking are the only essentials for taxpayers with twin responsibilities in a broken regulatory system.
Read more: IRS Tax Relief Claim: How can you claim benefits if you were affected by a natural disaster?
Read more: Tax deadline alert: when is the filing deadline and what are the penalties for filing late?
