Disaster Mitigation and Tax Parity Act of 2025
Disaster Mitigation and Tax Parity Act of 2025
Plain Language Summary
# Disaster Mitigation and Tax Parity Act of 2025 – Summary **What the bill does:** This bill would allow homeowners to exclude certain state disaster-relief payments from their federal income taxes when they use that money to make their homes more resistant to disasters (like hurricanes, floods, or earthquakes). Currently, homeowners can exclude similar federal disaster relief payments from taxes, but state-level disaster programs don't receive the same tax treatment. This bill creates parity by extending the tax break to state programs. **Who it affects:** Primarily homeowners in states that have established catastrophe loss mitigation programs or disaster relief funds.
This would benefit people making home improvements funded by state disaster assistance programs, allowing them to keep more of that money without federal tax consequences. **Key provision:** The bill ensures that payments from state disaster mitigation programs are treated the same way as federal disaster relief payments for tax purposes—meaning recipients won't owe federal income tax on those funds when used for hazard mitigation improvements. **Current status:** The bill (S. 336) was introduced in the 119th Congress by Senator Thomas Tillis (R-NC) and is currently in committee, meaning it hasn't yet been debated or voted on by the full Senate.
CRS Official Summary
Disaster Mitigation and Tax Parity Act of 2025This bill excludes from gross income, for federal income tax purposes, payments received from a state catastrophe loss mitigation program by an individual for the purpose of making improvements to the individual’s property that mitigate the impact of certain disasters.Under current law, individuals may exclude from gross income, for federal income tax purposes, payments received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) for hazard mitigation. (Some exceptions apply.) Further, under current law, such payments do not increase the basis of the property for which the payments are made.The bill allows a similar exclusion from gross income for certain payments received by an individual from a program established bya state (or any political subdivision or instrumentality of the state),a joint powers authority, oran entity that was established by the state to provide essential or basic property insurance and is regulated by the state.Under the bill, such payments must be for making improvements to the individual’s property for the sole purpose of reducing damage that would be done to the property by a windstorm, earthquake, flood, or wildfire.Finally, the bill provides that such payments from a state catastrophe loss mitigation program do not increase the basis of the property for which the payments are made.
Latest Action
Read twice and referred to the Committee on Finance.