READY Accounts Act
READY Accounts Act
Plain Language Summary
# READY Accounts Act Summary **What It Does:** The READY Accounts Act would create a new type of savings account specifically for homeowners to save money for disaster preparedness and recovery. People could contribute up to $4,500 per year to these accounts (with the limit increasing with inflation after 2027) and deduct these contributions from their taxes. When they withdraw the money, they wouldn't pay taxes on it—but only if they use it for qualified home disaster expenses. **Key Provisions & Who It Affects:** The bill targets homeowners who want to prepare for natural disasters or recover from them.
Qualified uses include installing storm-resistant features like impact-resistant windows and doors, reinforcing roofs, replacing damaged roofing, and other upgrades certified by industry professionals. This would primarily benefit homeowners in disaster-prone areas, as well as those recovering from recent hurricanes, floods, or other natural disasters. The bill also includes annual inflation adjustments to contribution limits starting in 2027. **Current Status:** The bill (S 1940) was introduced in the 119th Congress by Senator Rick Scott (R-FL) and is currently in committee, meaning it's still in the early stages of the legislative process and has not yet been voted on by the full Senate.
CRS Official Summary
READY Accounts ActThis bill establishes a new Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) account, allows individuals to make tax-deductible contributions of up to $4,500 per year to such accounts (adjusted annually for inflation beginning in 2027), and allows individuals to take tax-free distributions from such accounts to pay for qualified home disaster mitigation and recovery expenses related to a principal residence owned by the taxpayer.Under the bill, qualified home disaster mitigation expenses include expenses certified by a qualified industry professional as meeting criteria to mitigate damage from a natural or other disaster, includinginstalling a roofing underlayment to sheathing, impact-resistant windows, impact-resistant entry doors, or ground anchors;replacing a roof covering;applying a foam adhesive to reinforce the roof structure;strengthening the connection of the roof deck to roof framing, roof-to-wall connections, soffits, or attic ventilation openings;elevating a residence; orachieving the current building code standard.Qualified home disaster recovery expenses include costs for repairing damage to a residence resulting from fire, storm, or other casualty (provided such costs are not reimbursed).Distributions from a READY account used for anything other than qualified home disaster mitigation and recovery expenses must be included in gross income and are subject to a 20% penalty. (Some exceptions apply.)Finally, the bill imposes a 6% tax on contributions in excess of the annual limit. (Some exceptions apply.)
Latest Action
Read twice and referred to the Committee on Finance.