To amend the Internal Revenue Code of 1986 to provide tax relief for certain disaster losses, and for other purposes.

Amends the Internal Revenue Code to allow a tax credit for unused disaster losses attributable to a disaster occurring before December 31, 1991. Prohibits the use of the tax credit together with the tax deduction for losses.

Sets forth special rules for disaster losses involving residences.

Allows penalty-free withdrawals from retirement plans for disaster losses occurring after July 31, 1989, and before January 1, 1992.

Provides a tax exemption for State and local bonds used to provide disaster loans to small and moderate businesses for disasters occurring after July 31, 1989.