diff --git a/changelog.d/fix-ar-pr-casualty-loss.fixed.md b/changelog.d/fix-ar-pr-casualty-loss.fixed.md
new file mode 100644
index 00000000000..30e8a920d18
--- /dev/null
+++ b/changelog.d/fix-ar-pr-casualty-loss.fixed.md
@@ -0,0 +1 @@
+Exclude dependents' casualty losses from Arkansas returns, apply each separate-filing spouse's casualty reduction and AGI floor before proration, and limit Puerto Rico's casualty deductions to the two statutory items with the personal-property cap.
diff --git a/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/exclusion.yaml b/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/exclusion.yaml
index f305b0503da..debce7be6a3 100644
--- a/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/exclusion.yaml
+++ b/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/exclusion.yaml
@@ -11,8 +11,10 @@ metadata:
       href: https://www.arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2009R%2FPublic%2F&file=372.pdf&ddBienniumSession=2009%2F2009R#page=5
     - title: Act 372 of 2009, § 25 (effective for tax years beginning on or after January 1, 2009)
       href: https://www.arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2009R%2FPublic%2F&file=372.pdf&ddBienniumSession=2009%2F2009R#page=10
-    - title: 26 U.S.C. § 165(h), 2008 edition (as in effect on January 1, 2009)
-      href: https://www.govinfo.gov/content/pkg/USCODE-2008-title26/html/USCODE-2008-title26-subtitleA-chap1-subchapB-partVI-sec165.htm
+    - title: 26 U.S.C. § 165(h)(1), 2011 edition (individual casualty loss limitation adopted by Ark. Code § 26-51-424(b))
+      href: https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVI-sec165.pdf#page=1
+    - title: 26 U.S.C. § 165(h)(5)(B), 2011 edition (joint-return spouses treated as one individual)
+      href: https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVI-sec165.pdf#page=2
     - title: 2018 Arkansas Form AR4684, Line 11
       href: https://www.dfa.arkansas.gov/wp-content/uploads/2018_Final_AR4684_BC_FI.pdf#page=1
     - title: 2025 Arkansas Form AR4684, Line 11
diff --git a/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/income_floor.yaml b/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/income_floor.yaml
index 1c368b1a9b9..e6735874551 100644
--- a/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/income_floor.yaml
+++ b/policyengine_us/parameters/gov/states/ar/tax/income/deductions/itemized/casualty_loss/income_floor.yaml
@@ -10,8 +10,10 @@ metadata:
       href: https://www.arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2009R%2FPublic%2F&file=372.pdf&ddBienniumSession=2009%2F2009R#page=5
     - title: Act 372 of 2009, § 25 (effective for tax years beginning on or after January 1, 2009)
       href: https://www.arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2009R%2FPublic%2F&file=372.pdf&ddBienniumSession=2009%2F2009R#page=10
-    - title: 26 U.S.C. § 165(h), 2008 edition (as in effect on January 1, 2009)
-      href: https://www.govinfo.gov/content/pkg/USCODE-2008-title26/html/USCODE-2008-title26-subtitleA-chap1-subchapB-partVI-sec165.htm
+    - title: 26 U.S.C. § 165(h)(2)(A)(ii), 2011 edition (individual casualty loss limitation adopted by Ark. Code § 26-51-424(b))
+      href: https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVI-sec165.pdf#page=1
+    - title: 26 U.S.C. § 165(h)(5)(B), 2011 edition (joint-return spouses treated as one individual)
+      href: https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVI-sec165.pdf#page=2
     - title: 2025 Arkansas Form AR4684, Line 17
       href: https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR4684_Casualties_and_Thefts.pdf#page=1
     - title: 2015 Arkansas Individual Income Tax Instructions, Form AR3 Line 18
diff --git a/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/personal_property_cap.yaml b/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/personal_property_cap.yaml
new file mode 100644
index 00000000000..8cf332f9ad6
--- /dev/null
+++ b/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/personal_property_cap.yaml
@@ -0,0 +1,38 @@
+# SEPARATE means Puerto Rico filing status 3: spouses living together at the
+# end of the year who file separately. A married person not living with the
+# spouse files as an individual taxpayer under the $5,000 cap.
+description: Puerto Rico limits the deduction for casualty losses of automobiles, furniture and other household goods to this amount, based on filing status.
+metadata:
+  propagate_metadata_to_children: true
+  unit: currency-USD
+  period: year
+  label: Puerto Rico personal property casualty loss deduction cap
+  breakdown:
+    - filing_status
+  breakdown_label:
+    - Filing status
+  reference:
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)(i) (13 L.P.R.A. § 30135), as enacted by Act 1-2011
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=189
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)(i), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167
+    - title: Código de Rentas Internas de Puerto Rico de 2011, Sección 1033.15(a)(10)(B)(i), OGP compilation (Rev. 28 de mayo de 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/C%C3%B3digos/1-2011/1-2011.pdf#page=182
+    - title: Act 1-2011, Section 6100.04(a)(1) (Subtitle A applies to taxable years starting after December 31, 2010)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=1313
+    - title: 2023 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 5
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2023.pdf#page=26
+    - title: 2024 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 5
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2024.pdf#page=26
+    - title: 2025 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 5
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=26
+SINGLE:
+  2011-01-01: 5_000
+JOINT:
+  2011-01-01: 5_000
+SEPARATE:
+  2011-01-01: 2_500
+HEAD_OF_HOUSEHOLD:
+  2011-01-01: 5_000
+SURVIVING_SPOUSE:
+  2011-01-01: 5_000
diff --git a/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/separate_percentage.yaml b/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/separate_percentage.yaml
index 087fa8d0a2e..3b670df3c78 100644
--- a/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/separate_percentage.yaml
+++ b/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/separate_percentage.yaml
@@ -1,14 +1,29 @@
-description: Puerto Rico deducts this percentage of casualty loss for separate filers.
+# SEPARATE means Puerto Rico filing status 3: spouses living together at the
+# end of the year who file separately. A married person not living with the
+# spouse files as an individual taxpayer and claims the whole loss.
+description: Puerto Rico allows each spouse filing a separate return this share of the couple's casualty losses on the principal residence and on household personal property.
+values:
+  2011-01-01: 0.5
 metadata:
   unit: /1
   period: year
-  label: Puerto Rico casualty loss deduction separate filing status percentage  
+  label: Puerto Rico casualty loss deduction separate filing share
   reference:
-    - title: P.R. Laws tit. 13, § 30135 (10)(A)(ii)
-      href: https://law.justia.com/codes/puerto-rico/title-thirteen/subtitle-17/part-ii/chapter-1005/subchapter-c/30135/
-    - title: Gov. of Puerto Rico Individual Income Tax Return Form 482.0 4 
-      href: https://hacienda.pr.gov/sites/default/files/individuals_2024_rev._jul_12_24_9-30-24_informative.pdf#page=4
-    - title:  Individual Income Tax Return Instructions Booklet 2023
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(A)(ii) (13 L.P.R.A. § 30135), as enacted by Act 1-2011
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=188
+    - title: P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(A)(ii), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167
+    - title: P.R. Internal Revenue Code of 2011, Section 1021.03(a)(4) (50% attribution of Section 1033.15(a)(10) deductions), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=40
+    - title: P.R. Internal Revenue Code of 2011, Section 1061.01(b)(2)(B) (separate returns follow Section 1021.03(a)(1)-(6)), OGP English compilation (Rev. June 18, 2026)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=321
+    - title: Act 1-2011, Section 6100.04(a)(1) (Subtitle A applies to taxable years starting after December 31, 2010)
+      href: https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/0001-2011.pdf#page=1313
+    - title: 2023 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 2
       href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2023.pdf#page=24
-values:
-  2023-01-01: 0.5
+    - title: 2024 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 2
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2024.pdf#page=24
+    - title: 2025 Individual Income Tax Return Instructions Booklet, filing status 3 (married filing separately)
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=14
+    - title: 2025 Individual Income Tax Return Instructions Booklet, Schedule A Individual, Part I, line 2
+      href: https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=24
diff --git a/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/sources.yaml b/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/sources.yaml
index 607ec6a0a1e..9890467285f 100644
--- a/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/sources.yaml
+++ b/policyengine_us/parameters/gov/territories/pr/tax/income/taxable_income/deductions/sources.yaml
@@ -2,6 +2,7 @@ description: Puerto Rico deductions from taxable income.
 values:
   2023-01-01:
     - pr_casualty_loss_deduction
+    - pr_personal_property_casualty_loss_deduction
     - pr_charitable_deduction
     - pr_medical_expense_deduction
     - pr_mortgage_deduction
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.yaml b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.yaml
index fb18b75ab45..9707015f16c 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.yaml
@@ -55,23 +55,110 @@
   output:
     ar_casualty_loss_deduction_indiv: 0
 
-- name: 2025, losses of both spouses are treated as one casualty
-  # 12,000 + 8,000 - 100 - 10% * (30,000 + 20,000) = 14,900
-  period: 2025
+- name: 2017, separate spouses each apply the casualty reduction and AGI floor
+  # (12,000 - 100 - 3,000) + (8,000 - 100 - 2,000) = 14,800.
+  period: 2017
   input:
     people:
       person1:
+        age: 40
         casualty_loss: 12_000
         ar_agi_indiv: 30_000
       person2:
+        age: 40
         casualty_loss: 8_000
         ar_agi_indiv: 20_000
     tax_units:
       tax_unit:
         members: [person1, person2]
+        filing_status: JOINT
     households:
       household:
         members: [person1, person2]
         state_code: AR
   output:
-    ar_casualty_loss_deduction_indiv: 14_900
+    ar_casualty_loss_deduction_indiv: 14_800
+
+- name: 2025, a spouse without a casualty does not supply an additional AGI floor
+  # max(0, 12,000 - 100 - 3,000) + max(0, 0 - 100 - 2,000) = 8,900.
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 40
+        casualty_loss: 12_000
+        ar_agi_indiv: 30_000
+      person2:
+        age: 40
+        casualty_loss: 0
+        ar_agi_indiv: 20_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 8_900
+
+- name: 2025, a dependent's loss is not deductible on the filer's return
+  # 26 U.S.C. § 165(h), as adopted by Ark. Code § 26-51-424(b), allows the
+  # loss of the individual who sustained it, on that individual's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        ar_agi_indiv: 30_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: false
+        ar_agi_indiv: 20_000
+      person3:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 20_000
+        ar_agi_indiv: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 0
+
+- name: 2025, spouses apply separate casualty limits and leave out a dependent's loss
+  # (12,000 - 100 - 3,000) + (8,000 - 100 - 2,000) = 14,800;
+  # the dependent's 5,000 is excluded.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        casualty_loss: 12_000
+        ar_agi_indiv: 30_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: false
+        casualty_loss: 8_000
+        ar_agi_indiv: 20_000
+      person3:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 5_000
+        ar_agi_indiv: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2, person3]
+    households:
+      household:
+        members: [person1, person2, person3]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 14_800
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml
index baf51c21542..7ebdf1c40ba 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.yaml
@@ -87,6 +87,56 @@
   output:
     ar_casualty_loss_deduction_joint: 14_500
 
+- name: 2025, a dependent's loss is not deductible on the filer's return
+  # 26 U.S.C. § 165(h), as adopted by Ark. Code § 26-51-424(b), allows the
+  # loss of the individual who sustained it, on that individual's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        ar_agi_joint: 50_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 20_000
+        ar_agi_joint: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_joint: 0
+
+- name: 2025, only the filer's own loss counts when a dependent also has one
+  # 12,000 - 100 - 10% * 50,000 = 6,900; the dependent's 3,000 is excluded.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        casualty_loss: 12_000
+        ar_agi_joint: 50_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: true
+        casualty_loss: 3_000
+        ar_agi_joint: 0
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_joint: 6_900
+
 - name: A spouse's loss that makes the joint AGI negative does not raise the casualty loss deduction
   period: 2024
   input:
diff --git a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_itemized_deductions_indiv.yaml b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_itemized_deductions_indiv.yaml
index 2143354aae2..75a77418b7a 100644
--- a/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_itemized_deductions_indiv.yaml
+++ b/policyengine_us/tests/policy/baseline/gov/states/ar/tax/income/deductions/itemized/ar_itemized_deductions_indiv.yaml
@@ -81,6 +81,60 @@
   output:
     ar_itemized_deductions_indiv: [590, 410]
 
+- name: A spouse's casualty loss is split by AGI share, not by owner
+  # Only the spouse had a loss. Apply that spouse's casualty limitations:
+  # 20,100 - 100 - 10% * 40,000 = 16,000.
+  # AR3 lines 31-35 split the line 30 total by AGI share:
+  # 60% * 16,000 = 9,600 and 40% * 16,000 = 6,400.
+  period: 2025
+  input:
+    people:
+      person1:
+        is_tax_unit_head: true
+        is_tax_unit_dependent: false
+        ar_agi_indiv: 60_000
+      person2:
+        is_tax_unit_head: false
+        is_tax_unit_dependent: false
+        casualty_loss: 20_100
+        ar_agi_indiv: 40_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 16_000
+    ar_itemized_deductions_indiv: [9_600, 6_400]
+
+- name: 2025, separate casualty limitations precede AR3 proration
+  # (12,000 - 100 - 3,000) + (8,000 - 100 - 2,000) = 14,800.
+  # AR3 prorates this total 60% and 40%: 8,880 and 5,920.
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 40
+        casualty_loss: 12_000
+        ar_agi_indiv: 30_000
+      person2:
+        age: 40
+        casualty_loss: 8_000
+        ar_agi_indiv: 20_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    households:
+      household:
+        members: [person1, person2]
+        state_code: AR
+  output:
+    ar_casualty_loss_deduction_indiv: 14_800
+    ar_itemized_deductions_indiv: [8_880, 5_920]
+
 - name: 2020 gambling loss deduction is prorated by AGI when married filing separately
   period: 2020
   input:
diff --git a/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.yaml b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.yaml
new file mode 100644
index 00000000000..8440ebf8bbf
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.yaml
@@ -0,0 +1,92 @@
+- name: Case 1, separate filer claims half of the principal residence loss.
+  # Section 1033.15(a)(10)(A)(ii): 50% * 20,000 = 10,000
+  period: 2024
+  input:
+    pr_principal_residence_casualty_loss: 20_000
+    filing_status: SEPARATE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 10_000
+
+- name: Case 2, single filer deducts the whole principal residence loss.
+  period: 2024
+  input:
+    pr_principal_residence_casualty_loss: 3_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 3_000
+
+- name: Case 3, a generic casualty or theft loss does not qualify.
+  # casualty_loss holds any personal casualty or theft loss (federal Form
+  # 4684). Puerto Rico allows only the principal residence loss, entered as
+  # pr_principal_residence_casualty_loss.
+  period: 2024
+  input:
+    casualty_loss: 20_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 0
+
+- name: Case 4, a household goods loss is not a principal residence loss.
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 4_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 0
+
+- name: Case 5, joint filers have no cap or income floor.
+  # 18,000 + 12,000 = 30,000
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        pr_principal_residence_casualty_loss: 18_000
+      person2:
+        age: 43
+        pr_principal_residence_casualty_loss: 12_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PR
+  output:
+    pr_casualty_loss_deduction: 30_000
+
+- name: Case 6, a dependent's loss is left off the filer's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        pr_principal_residence_casualty_loss: 5_000
+      person2:
+        age: 17
+        is_tax_unit_dependent: true
+        pr_principal_residence_casualty_loss: 2_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: HEAD_OF_HOUSEHOLD
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PR
+  output:
+    pr_casualty_loss_deduction: 5_000
+
+- name: Case 7, no deduction outside Puerto Rico.
+  period: 2025
+  input:
+    pr_principal_residence_casualty_loss: 5_000
+    filing_status: SINGLE
+    state_code: NY
+  output:
+    pr_casualty_loss_deduction: 0
diff --git a/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_deduction.yaml b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_deduction.yaml
new file mode 100644
index 00000000000..f6a26bd2bb4
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_deduction.yaml
@@ -0,0 +1,158 @@
+- name: Case 1, single filer below the cap.
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 3_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 3_000
+
+- name: Case 2, single filer exactly at the cap.
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 5_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 5_000
+
+- name: Case 3, single filer above the cap.
+  # Section 1033.15(a)(10)(B)(i): limited to $5,000
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 8_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 5_000
+
+- name: Case 4, head of household above the cap.
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 6_000
+    filing_status: HEAD_OF_HOUSEHOLD
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 5_000
+
+- name: Case 5, surviving spouse above the cap.
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 6_000
+    filing_status: SURVIVING_SPOUSE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 5_000
+
+- name: Case 6, joint filers share one $5,000 cap.
+  # 3,000 + 4,000 = 7,000, capped at 5,000
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        pr_personal_property_casualty_loss: 3_000
+      person2:
+        age: 43
+        pr_personal_property_casualty_loss: 4_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: JOINT
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 5_000
+
+- name: Case 7, separate filer is capped at $2,500.
+  # 50% * 8,000 = 4,000, capped at 2,500
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 8_000
+    filing_status: SEPARATE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 2_500
+
+- name: Case 8, separate filer claims half of the couple's loss.
+  # Section 1021.03(a)(4) attributes (a)(10) deductions 50% to each spouse:
+  # 50% * 3,000 = 1,500, below the 2,500 cap
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 3_000
+    filing_status: SEPARATE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 1_500
+
+- name: Case 9, carryover from a prior year counts toward the annual cap.
+  # 2,000 + 2,500 = 4,500
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 2_000
+    pr_personal_property_casualty_loss_carryover: 2_500
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 4_500
+
+- name: Case 10, carryover and current loss together are capped.
+  # 2,000 + 4,000 = 6,000, capped at 5,000
+  period: 2025
+  input:
+    pr_personal_property_casualty_loss: 2_000
+    pr_personal_property_casualty_loss_carryover: 4_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 5_000
+
+- name: Case 11, a generic casualty or theft loss does not qualify.
+  period: 2025
+  input:
+    casualty_loss: 8_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 0
+
+- name: Case 12, a principal residence loss is not a household goods loss.
+  period: 2025
+  input:
+    pr_principal_residence_casualty_loss: 8_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 0
+
+- name: Case 13, a dependent's loss is left off the filer's return.
+  period: 2025
+  input:
+    people:
+      person1:
+        age: 45
+        pr_personal_property_casualty_loss: 1_000
+      person2:
+        age: 17
+        is_tax_unit_dependent: true
+        pr_personal_property_casualty_loss: 3_000
+    tax_units:
+      tax_unit:
+        members: [person1, person2]
+        filing_status: HEAD_OF_HOUSEHOLD
+    households:
+      household:
+        members: [person1, person2]
+        state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 1_000
+
+- name: Case 14, no deduction with no loss.
+  period: 2025
+  input:
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_personal_property_casualty_loss_deduction: 0
diff --git a/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/pr_casualty_loss_deduction.yaml b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/pr_casualty_loss_deduction.yaml
deleted file mode 100644
index 84bdf91fcb2..00000000000
--- a/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/pr_casualty_loss_deduction.yaml
+++ /dev/null
@@ -1,17 +0,0 @@
-- name: Separate filer
-  period: 2024
-  input:
-    casualty_loss: 20_000
-    filing_status: SEPARATE
-    state_code: PR
-  output:
-    pr_casualty_loss_deduction: 10_000
-
-- name: Single filer
-  period: 2024
-  input:
-    casualty_loss: 3_000
-    filing_status: SINGLE
-    state_code: PR
-  output:
-    pr_casualty_loss_deduction: 3_000
diff --git a/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/pr_deductions.yaml b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/pr_deductions.yaml
new file mode 100644
index 00000000000..4580501e88e
--- /dev/null
+++ b/policyengine_us/tests/policy/baseline/gov/territories/pr/tax/income/taxable_income/deductions/pr_deductions.yaml
@@ -0,0 +1,14 @@
+- name: Case 1, both casualty loss deductions count toward the total.
+  # Schedule A Individual, Part I, line 2: 10,000 (no cap)
+  # Schedule A Individual, Part I, line 5: 7,000, capped at 5,000
+  # 10,000 + 5,000 = 15,000
+  period: 2025
+  input:
+    pr_principal_residence_casualty_loss: 10_000
+    pr_personal_property_casualty_loss: 7_000
+    filing_status: SINGLE
+    state_code: PR
+  output:
+    pr_casualty_loss_deduction: 10_000
+    pr_personal_property_casualty_loss_deduction: 5_000
+    pr_deductions: 15_000
diff --git a/policyengine_us/tests/unit/test_ar_misc_casualty_deduction_properties.py b/policyengine_us/tests/unit/test_ar_misc_casualty_deduction_properties.py
index f818d7b6b4b..4587e291076 100644
--- a/policyengine_us/tests/unit/test_ar_misc_casualty_deduction_properties.py
+++ b/policyengine_us/tests/unit/test_ar_misc_casualty_deduction_properties.py
@@ -8,8 +8,10 @@
   and § 26-51-424(b) (26 U.S.C. § 165(h) as in effect on January 1, 2009);
 - they are non-negative, never exceed the expenses or the loss after the
   exclusion, rise with expenses or losses, and fall with Arkansas AGI;
-- the joint and separate variants agree on the same inputs;
+- the joint and separate variants agree for a single filer;
+- separate spouses apply their casualty reduction and AGI floor individually;
 - they do not depend on the year across the federal TCJA suspension;
+- a dependent's casualty loss never changes the filer's casualty deduction;
 - before 2018, the Arkansas miscellaneous deduction equals the federal one
   when Arkansas AGI equals federal AGI, since both apply one 2% floor.
 """
@@ -70,7 +72,7 @@ def misc_reference(expenses, agi):
 
 def casualty_reference(loss, agi, year):
     after_exclusion = np.maximum(0, loss - casualty_exclusion(year))
-    return np.maximum(0, after_exclusion - CASUALTY_FLOOR * agi)
+    return np.maximum(0, after_exclusion - CASUALTY_FLOOR * np.maximum(agi, 0))
 
 
 def assert_monotone(values, amount, agi):
@@ -156,3 +158,118 @@ def test_misc_deduction_matches_federal_before_2018(year):
         sim.calculate("ar_misc_deduction_joint", year),
         sim.calculate("misc_deduction", year),
     )
+
+
+DEPENDENT_LOSSES = [0, 100, 5_000, 250_000]
+
+
+@pytest.mark.parametrize("year", [2010, 2025])
+def test_casualty_loss_deduction_ignores_dependents_losses(year):
+    """26 U.S.C. § 165(h), as adopted by Ark. Code § 26-51-424(b), allows the
+    loss of the individual who sustained it, so a dependent's loss belongs on
+    the dependent's own return. Each tax unit holds a head and a dependent."""
+    grid = list(itertools.product(AMOUNTS, AGIS, DEPENDENT_LOSSES))
+    situation = {"people": {}, "tax_units": {}, "households": {}}
+    for i, (head_loss, agi, dependent_loss) in enumerate(grid):
+        head, dependent = f"h{i}", f"d{i}"
+        for person, loss, person_agi, is_dependent in (
+            (head, head_loss, agi, False),
+            (dependent, dependent_loss, 0, True),
+        ):
+            situation["people"][person] = {
+                "age": {year: 10 if is_dependent else 40},
+                "is_tax_unit_head": {year: not is_dependent},
+                "is_tax_unit_dependent": {year: is_dependent},
+                "casualty_loss": {year: loss},
+                "ar_agi_joint": {year: person_agi},
+                "ar_agi_indiv": {year: person_agi},
+            }
+        situation["tax_units"][f"t{i}"] = {"members": [head, dependent]}
+        situation["households"][f"hh{i}"] = {
+            "members": [head, dependent],
+            "state_code": {year: "AR"},
+        }
+    sim = Simulation(situation=situation)
+    head_loss = np.array([g[0] for g in grid], dtype=float)
+    agi = np.array([g[1] for g in grid], dtype=float)
+    expected = casualty_reference(head_loss, agi, year)
+    for variable in (
+        "ar_casualty_loss_deduction_joint",
+        "ar_casualty_loss_deduction_indiv",
+    ):
+        np.testing.assert_allclose(sim.calculate(variable, year), expected)
+    # Guard against a vacuous pass: some dependents have losses that would
+    # raise the deduction if they were counted.
+    assert max(DEPENDENT_LOSSES) > 0 and expected.max() > 0
+
+
+SPOUSE_INPUTS = [
+    (0, -10_000),
+    (0, 0),
+    (0, 50_000),
+    (50, 10_000),
+    (5_100, 50_000),
+    (8_000, 20_000),
+    (12_000, 30_000),
+    (250_000, 1_000_000),
+]
+
+
+@pytest.mark.parametrize("year", [2017, 2025])
+def test_separate_spouses_apply_individual_casualty_limits(year):
+    """Separate filers each apply § 165(h)'s limits before AR3 proration.
+
+    Cover unequal losses and AGIs, a spouse without a loss (including with
+    negative AGI), losses below their own floor, and invariance to dependent
+    losses. Joint filers keep one exclusion and the combined AGI floor under
+    § 165(h)(5)(B).
+    """
+    grid = list(itertools.product(SPOUSE_INPUTS, SPOUSE_INPUTS, DEPENDENT_LOSSES))
+    situation = {"people": {}, "tax_units": {}, "households": {}}
+    for i, (head_inputs, spouse_inputs, dependent_loss) in enumerate(grid):
+        head, spouse, dependent = f"h{i}", f"s{i}", f"d{i}"
+        for person, (loss, agi), is_head, is_spouse in (
+            (head, head_inputs, True, False),
+            (spouse, spouse_inputs, False, True),
+            (dependent, (dependent_loss, 0), False, False),
+        ):
+            situation["people"][person] = {
+                "age": {year: 10 if person == dependent else 40},
+                "is_tax_unit_head": {year: is_head},
+                "is_tax_unit_spouse": {year: is_spouse},
+                "is_tax_unit_dependent": {year: person == dependent},
+                "casualty_loss": {year: loss},
+                "ar_agi_joint": {year: agi},
+                "ar_agi_indiv": {year: agi},
+            }
+        situation["tax_units"][f"t{i}"] = {
+            "members": [head, spouse, dependent],
+            "filing_status": {year: "JOINT"},
+        }
+        situation["households"][f"hh{i}"] = {
+            "members": [head, spouse, dependent],
+            "state_code": {year: "AR"},
+        }
+
+    head_loss = np.array([g[0][0] for g in grid], dtype=float)
+    head_agi = np.array([g[0][1] for g in grid], dtype=float)
+    spouse_loss = np.array([g[1][0] for g in grid], dtype=float)
+    spouse_agi = np.array([g[1][1] for g in grid], dtype=float)
+    expected = casualty_reference(head_loss, head_agi, year) + casualty_reference(
+        spouse_loss, spouse_agi, year
+    )
+    sim = Simulation(situation=situation)
+    separate = sim.calculate("ar_casualty_loss_deduction_indiv", year)
+    joint = sim.calculate("ar_casualty_loss_deduction_joint", year)
+    np.testing.assert_allclose(separate, expected)
+    np.testing.assert_allclose(
+        joint,
+        casualty_reference(head_loss + spouse_loss, head_agi + spouse_agi, year),
+    )
+    assert np.all(separate >= 0)
+    assert np.all(separate <= head_loss + spouse_loss)
+    # Each group differs only in dependent loss, so all results must agree.
+    dependent_results = separate.reshape(-1, len(DEPENDENT_LOSSES))
+    assert np.all(dependent_results == dependent_results[:, :1])
+    # Guard against a vacuous pass: the grid distinguishes the two methods.
+    assert np.any(separate > joint) and np.any(separate < joint)
diff --git a/policyengine_us/tests/unit/test_pr_casualty_loss_deduction_properties.py b/policyengine_us/tests/unit/test_pr_casualty_loss_deduction_properties.py
new file mode 100644
index 00000000000..d94ce614038
--- /dev/null
+++ b/policyengine_us/tests/unit/test_pr_casualty_loss_deduction_properties.py
@@ -0,0 +1,144 @@
+"""Properties of the Puerto Rico casualty loss deductions.
+
+Each test evaluates every point of an input grid in one vectorized
+simulation, so the properties hold for all grid inputs rather than for a few
+examples:
+
+- the deductions match a closed-form reference of P.R. Internal Revenue Code
+  of 2011 Section 1033.15(a)(10): (A) the principal residence loss in full,
+  or half for a spouse filing separately, with no cap; (B) the automobile and
+  household goods loss plus any carryover, capped at $5,000, or half of the
+  loss capped at $2,500 for a spouse filing separately;
+- they are non-negative and stay within the loss and the cap, and (B) rises
+  with the loss and the carryover;
+- the generic casualty_loss input, which holds any casualty or theft loss,
+  changes neither deduction;
+- both deductions flow into pr_deductions.
+"""
+
+import itertools
+
+import numpy as np
+import pytest
+
+from policyengine_us import Simulation
+
+YEAR = 2025
+RESIDENCE_LOSSES = [0, 1, 2_500, 20_000]
+PERSONAL_LOSSES = [0, 1, 2_500, 4_999, 5_000, 5_001, 10_000]
+CARRYOVERS = [0, 1_000, 6_000]
+FILING_STATUSES = [
+    "SINGLE",
+    "JOINT",
+    "SEPARATE",
+    "HEAD_OF_HOUSEHOLD",
+    "SURVIVING_SPOUSE",
+]
+GENERIC_LOSSES = [0, 50_000]
+GRID = list(
+    itertools.product(
+        RESIDENCE_LOSSES,
+        PERSONAL_LOSSES,
+        CARRYOVERS,
+        FILING_STATUSES,
+        GENERIC_LOSSES,
+    )
+)
+
+SEPARATE_SHARE = 0.5
+CAP = 5_000
+SEPARATE_CAP = 2_500
+
+
+def grid_simulation():
+    """One single-person tax unit per grid point, all in Puerto Rico."""
+    situation = {"people": {}, "tax_units": {}, "households": {}}
+    for i, (residence, personal, carryover, status, generic) in enumerate(GRID):
+        person = f"p{i}"
+        situation["people"][person] = {
+            "age": {YEAR: 40},
+            "pr_principal_residence_casualty_loss": {YEAR: residence},
+            "pr_personal_property_casualty_loss": {YEAR: personal},
+            "casualty_loss": {YEAR: generic},
+        }
+        situation["tax_units"][f"t{i}"] = {
+            "members": [person],
+            "filing_status": {YEAR: status},
+            "pr_personal_property_casualty_loss_carryover": {YEAR: carryover},
+        }
+        situation["households"][f"h{i}"] = {
+            "members": [person],
+            "state_code": {YEAR: "PR"},
+        }
+    return Simulation(situation=situation)
+
+
+@pytest.fixture(scope="module")
+def out():
+    """The grid's results, computed once and only read by the tests."""
+    sim = grid_simulation()
+    return {
+        variable: sim.calculate(variable, YEAR)
+        for variable in (
+            "pr_casualty_loss_deduction",
+            "pr_personal_property_casualty_loss_deduction",
+            "pr_deductions",
+        )
+    }
+
+
+def column(index):
+    values = [g[index] for g in GRID]
+    if isinstance(values[0], str):
+        return np.array(values)
+    return np.array(values, dtype=float)
+
+
+def test_deductions_match_the_statute(out):
+    residence, personal, carryover, status = (column(i) for i in range(4))
+    separate = status == "SEPARATE"
+    share = np.where(separate, SEPARATE_SHARE, 1)
+    cap = np.where(separate, SEPARATE_CAP, CAP)
+    np.testing.assert_allclose(out["pr_casualty_loss_deduction"], share * residence)
+    np.testing.assert_allclose(
+        out["pr_personal_property_casualty_loss_deduction"],
+        np.minimum(share * personal + carryover, cap),
+    )
+
+
+def test_deductions_are_bounded(out):
+    residence, status = column(0), column(3)
+    cap = np.where(status == "SEPARATE", SEPARATE_CAP, CAP)
+    line_2 = out["pr_casualty_loss_deduction"]
+    line_5 = out["pr_personal_property_casualty_loss_deduction"]
+    assert np.all(line_2 >= 0) and np.all(line_2 <= residence)
+    assert np.all(line_5 >= 0) and np.all(line_5 <= cap)
+    # Guard against a vacuous pass: the cap binds somewhere.
+    assert np.any(line_5 == cap) and np.any(line_5 < cap)
+
+
+def test_personal_property_deduction_rises_with_loss_and_carryover(out):
+    line_5 = out["pr_personal_property_casualty_loss_deduction"]
+    table = line_5.reshape(
+        len(RESIDENCE_LOSSES),
+        len(PERSONAL_LOSSES),
+        len(CARRYOVERS),
+        len(FILING_STATUSES),
+        len(GENERIC_LOSSES),
+    )
+    assert np.all(np.diff(table, axis=1) >= 0), "falls as the loss rises"
+    assert np.all(np.diff(table, axis=2) >= 0), "falls as the carryover rises"
+
+
+def test_generic_casualty_loss_has_no_effect(out):
+    for variable, values in out.items():
+        table = values.reshape(-1, len(GENERIC_LOSSES))
+        np.testing.assert_allclose(table[:, 1], table[:, 0], err_msg=variable)
+
+
+def test_both_deductions_flow_into_the_total(out):
+    np.testing.assert_allclose(
+        out["pr_deductions"],
+        out["pr_casualty_loss_deduction"]
+        + out["pr_personal_property_casualty_loss_deduction"],
+    )
diff --git a/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.py b/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.py
index 42539b51cf3..4be0295c1f4 100644
--- a/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.py
+++ b/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_indiv.py
@@ -10,10 +10,15 @@ class ar_casualty_loss_deduction_indiv(Variable):
     reference = (
         # Ark. Code § 26-51-424(b), as amended by Act 372 of 2009, § 17
         "https://www.arkleg.state.ar.us/Acts/FTPDocument?path=%2FACTS%2F2009R%2FPublic%2F&file=372.pdf&ddBienniumSession=2009%2F2009R#page=5",
-        "https://www.govinfo.gov/content/pkg/USCODE-2008-title26/html/USCODE-2008-title26-subtitleA-chap1-subchapB-partVI-sec165.htm",
+        # Incorporated IRC § 165(h)(1)-(2) and (5)(B), 2011 edition
+        "https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVI-sec165.pdf#page=1",
+        "https://www.govinfo.gov/content/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partVI-sec165.pdf#page=2",
         # 2025 Form AR3 instructions, Line 18, and Form AR4684
         "https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR1000F_and_AR1000NR_Instructions.pdf#page=21",
         "https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR4684_Casualties_and_Thefts.pdf#page=1",
+        # 2025 Form AR3, Lines 18 and 30-35, and instructions for Lines 31-35
+        "https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR3_ItemizedDeduction.pdf#page=1",
+        "https://www.dfa.arkansas.gov/wp-content/uploads/2025_AR1000F_and_AR1000NR_Instructions.pdf#page=22",
     )
     defined_for = StateCode.AR
 
@@ -21,10 +26,14 @@ def formula(tax_unit, period, parameters):
         p = parameters(
             period
         ).gov.states.ar.tax.income.deductions.itemized.casualty_loss
-        # The model records one loss amount per person, not separate
-        # casualty events, so the tax unit's losses are treated as one
-        # casualty and the per-loss exclusion applies once.
-        loss = add(tax_unit, period, ["casualty_loss"])
+        # Incorporated IRC § 165(h)(1)-(2) applies the exclusion and AGI
+        # floor to each separate filer; only joint-return spouses count as
+        # one individual under § 165(h)(5)(B). The input records one
+        # casualty event per person. AR3 subsequently prorates the total
+        # itemized deductions by AGI in ar_itemized_deductions_indiv.
+        loss = tax_unit.members("casualty_loss", period)
         loss_after_exclusion = max_(0, loss - p.exclusion)
-        agi = add(tax_unit, period, ["ar_agi_indiv"])
-        return max_(0, loss_after_exclusion - p.income_floor * agi)
+        agi = max_(tax_unit.members("ar_agi_indiv", period), 0)
+        deduction = max_(0, loss_after_exclusion - p.income_floor * agi)
+        non_dependent = not_(tax_unit.members("is_tax_unit_dependent", period))
+        return tax_unit.sum(deduction * non_dependent)
diff --git a/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.py b/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.py
index 5116e6cfe8b..f4695831be8 100644
--- a/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.py
+++ b/policyengine_us/variables/gov/states/ar/tax/income/deductions/itemized/ar_casualty_loss_deduction_joint.py
@@ -24,7 +24,10 @@ def formula(tax_unit, period, parameters):
         # The model records one loss amount per person, not separate
         # casualty events, so the tax unit's losses are treated as one
         # casualty and the per-loss exclusion applies once.
-        loss = add(tax_unit, period, ["casualty_loss"])
+        # A dependent's loss belongs on the dependent's own return under
+        # 26 U.S.C. § 165(h) as adopted by § 26-51-424(b), even though
+        # ar_agi_joint moves the dependent's net income to the head.
+        loss = tax_unit_non_dep_add(tax_unit, period, ["casualty_loss"])
         loss_after_exclusion = max_(0, loss - p.exclusion)
         # A spouse's loss can make the joint AGI total negative; floor it at
         # zero so a negative AGI cannot enlarge the deduction.
diff --git a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.py b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.py
new file mode 100644
index 00000000000..0b9a78e73dd
--- /dev/null
+++ b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_casualty_loss_deduction.py
@@ -0,0 +1,34 @@
+from policyengine_us.model_api import *
+
+
+class pr_casualty_loss_deduction(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "Puerto Rico casualty loss deduction on the principal residence"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        # P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(A)
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167",
+        # Section 1033.05(a): an individual's other losses
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=137",
+        # 2025 Schedule A Individual, Part I, line 2
+        "https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=24",
+    )
+    defined_for = StateCode.PR
+
+    def formula(tax_unit, period, parameters):
+        p = parameters(
+            period
+        ).gov.territories.pr.tax.income.taxable_income.deductions.casualty_loss
+        # Section 1033.15(a)(10)(A) covers only the principal residence, not
+        # every casualty or theft loss that the generic casualty_loss input
+        # holds. Section 1033.05(a) allows other losses of an individual only
+        # in a trade or business or a transaction entered into for profit.
+        # A dependent's loss belongs on the dependent's own return.
+        loss = tax_unit_non_dep_add(
+            tax_unit, period, ["pr_principal_residence_casualty_loss"]
+        )
+        filing_status = tax_unit("filing_status", period)
+        separate = filing_status == filing_status.possible_values.SEPARATE
+        return where(separate, p.separate_percentage, 1) * loss
diff --git a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss.py b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss.py
new file mode 100644
index 00000000000..ffbcf6a449c
--- /dev/null
+++ b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss.py
@@ -0,0 +1,24 @@
+from policyengine_us.model_api import *
+
+
+class pr_personal_property_casualty_loss(Variable):
+    value_type = float
+    entity = Person
+    label = "Puerto Rico casualty loss on automobiles and household goods"
+    documentation = (
+        "Loss on automobiles, furniture, fixtures and other household goods, "
+        "excluding jewelry and cash, caused by an earthquake, hurricane, storm, "
+        "tropical depression or flood in an area the Governor of Puerto Rico "
+        "designated a disaster area, where the taxpayer claimed the disaster "
+        "assistance benefits, and not compensated by insurance or otherwise. "
+        "Enter the loss once, on the head or spouse; a spouse filing a separate "
+        "return enters the couple's whole loss."
+    )
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        # P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167",
+        # 2025 Schedule A Individual, Part I, line 5
+        "https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=26",
+    )
diff --git a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_carryover.py b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_carryover.py
new file mode 100644
index 00000000000..6cf478a352a
--- /dev/null
+++ b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_carryover.py
@@ -0,0 +1,22 @@
+from policyengine_us.model_api import *
+
+
+class pr_personal_property_casualty_loss_carryover(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "Puerto Rico personal property casualty loss carried over"
+    documentation = (
+        "Personal property casualty loss from either of the two preceding "
+        "taxable years that the filer may carry over to this year. Hacienda's "
+        "instructions describe it as the part of the $5,000 ($2,500 if married "
+        "filing separately) allowance not claimed in the year of the loss. "
+        "It counts toward this year's annual cap."
+    )
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        # P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)(i)
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167",
+        # 2025 Schedule A Individual, Part I, line 5
+        "https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=26",
+    )
diff --git a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_deduction.py b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_deduction.py
new file mode 100644
index 00000000000..8d08d7c8169
--- /dev/null
+++ b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_personal_property_casualty_loss_deduction.py
@@ -0,0 +1,38 @@
+from policyengine_us.model_api import *
+
+
+class pr_personal_property_casualty_loss_deduction(Variable):
+    value_type = float
+    entity = TaxUnit
+    label = "Puerto Rico casualty loss deduction on automobiles and household goods"
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        # P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(B)
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167",
+        # Sections 1061.01(b)(2)(B) and 1021.03(a)(4): spouses filing
+        # separately split (a)(10) deductions 50/50
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=321",
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=40",
+        # 2025 Schedule A Individual, Part I, line 5
+        "https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=26",
+    )
+    defined_for = StateCode.PR
+
+    def formula(tax_unit, period, parameters):
+        p = parameters(
+            period
+        ).gov.territories.pr.tax.income.taxable_income.deductions.casualty_loss
+        # A dependent's loss belongs on the dependent's own return.
+        loss = tax_unit_non_dep_add(
+            tax_unit, period, ["pr_personal_property_casualty_loss"]
+        )
+        filing_status = tax_unit("filing_status", period)
+        separate = filing_status == filing_status.possible_values.SEPARATE
+        # A spouse filing separately claims half of the couple's loss
+        # (Sections 1061.01(b)(2)(B) and 1021.03(a)(4)), up to the lower
+        # separate cap. A carryover from the two preceding years counts
+        # toward the same annual cap.
+        own_loss = where(separate, p.separate_percentage, 1) * loss
+        carryover = tax_unit("pr_personal_property_casualty_loss_carryover", period)
+        return min_(own_loss + carryover, p.personal_property_cap[filing_status])
diff --git a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_principal_residence_casualty_loss.py b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_principal_residence_casualty_loss.py
new file mode 100644
index 00000000000..8ae515d9c03
--- /dev/null
+++ b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/casualty_loss/pr_principal_residence_casualty_loss.py
@@ -0,0 +1,22 @@
+from policyengine_us.model_api import *
+
+
+class pr_principal_residence_casualty_loss(Variable):
+    value_type = float
+    entity = Person
+    label = "Puerto Rico casualty loss on the principal residence"
+    documentation = (
+        "Loss on the real property that was the taxpayer's principal residence "
+        "when the event occurred, caused by fire, hurricane, earthquake, storm, "
+        "tropical depression, flood or another casualty, and not compensated by "
+        "insurance or otherwise. Enter the loss once, on the head or spouse; a "
+        "spouse filing a separate return enters the couple's whole loss."
+    )
+    unit = USD
+    definition_period = YEAR
+    reference = (
+        # P.R. Internal Revenue Code of 2011, Section 1033.15(a)(10)(A)(i)
+        "https://bvirtualogp.pr.gov/ogp/Bvirtual/leyesreferencia/PDF/2-ingles/1-2011.pdf#page=167",
+        # 2025 Schedule A Individual, Part I, line 2
+        "https://hacienda.pr.gov/sites/default/files/inst_individuals_2025.pdf#page=24",
+    )
diff --git a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/pr_casualty_loss_deduction.py b/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/pr_casualty_loss_deduction.py
deleted file mode 100644
index 81035b9b663..00000000000
--- a/policyengine_us/variables/gov/territories/pr/tax/income/taxable_income/deductions/pr_casualty_loss_deduction.py
+++ /dev/null
@@ -1,27 +0,0 @@
-from policyengine_us.model_api import *
-
-
-class pr_casualty_loss_deduction(Variable):
-    value_type = float
-    entity = TaxUnit
-    label = "Puerto Rico casualty loss deduction"
-    unit = USD
-    definition_period = YEAR
-    reference = "https://law.justia.com/codes/puerto-rico/title-thirteen/subtitle-17/part-ii/chapter-1005/subchapter-c/30135/"  # (10)
-    defined_for = StateCode.PR
-
-    def formula(tax_unit, period, parameters):
-        p = parameters(
-            period
-        ).gov.territories.pr.tax.income.taxable_income.deductions.casualty_loss
-        loss = add(tax_unit, period, ["casualty_loss"])
-        filing_status = tax_unit("filing_status", period)
-
-        return (
-            where(
-                filing_status == filing_status.possible_values.SEPARATE,
-                p.separate_percentage,
-                1,
-            )
-            * loss
-        )
diff --git a/policyengine_us/variables/household/expense/tax/casualty_loss.py b/policyengine_us/variables/household/expense/tax/casualty_loss.py
index 2a25f13edec..f1d32924ec0 100644
--- a/policyengine_us/variables/household/expense/tax/casualty_loss.py
+++ b/policyengine_us/variables/household/expense/tax/casualty_loss.py
@@ -5,5 +5,10 @@ class casualty_loss(Variable):
     value_type = float
     entity = Person
     label = "Casualty/theft loss"
+    documentation = (
+        "Puerto Rico's casualty loss deductions do not use this amount. They "
+        "use pr_principal_residence_casualty_loss and "
+        "pr_personal_property_casualty_loss instead."
+    )
     unit = USD
     definition_period = YEAR