Flood Insurance Affordability Tax Credit Act
Flood Insurance Affordability Tax Credit Act
Plain Language Summary
# Flood Insurance Affordability Tax Credit Act - Plain Language Summary **What the Bill Does** This bill would create a new tax credit to help homeowners afford flood insurance premiums under the National Flood Insurance Program. If passed, eligible homeowners could receive a refundable tax credit covering up to 33% of their annual flood insurance costs. The IRS would also set up a program allowing people to receive this credit in advance rather than waiting until tax time, which could help those who struggle to pay premiums upfront. **Who It Affects and Key Limits** The credit is designed primarily for lower and middle-income homeowners. The benefit gradually decreases for households earning more than 350% of the federal poverty line and disappears entirely once household income reaches 435% of the poverty line.
The credit is not available to married couples filing separately or to people who can be claimed as dependents on someone else's tax return. This would mainly help homeowners in flood-prone areas—particularly relevant for states like Louisiana, where the bill's sponsor is from. **Current Status** The bill is currently in committee and has not yet been voted on by the full Senate. It remains in the early stages of the legislative process.
CRS Official Summary
Flood Insurance Affordability Tax Credit ActThis bill establishes a new refundable tax credit for up to 33% of the flood insurance premiums paid (or incurred) under the National Flood Insurance Program to insure a principal residence. The bill also requires the Internal Revenue Service (IRS) to establish a program for paying the tax credit in advance.Under the bill, the tax credit for flood insurance premiums may be reduced depending on the taxpayer’s household income in relation to the federal poverty line (FPL). The tax credit begins to phase out once a taxpayer’s household income is 350% of the FPL and is completely phased out once a taxpayer’s household income reaches 435% of the FPL. (Other limitations may apply.)Further, the tax credit for flood premiums may not be claimed by a married taxpayer who files a separate federal income tax return or a taxpayer who may be claimed as a dependent.Finally, the bill requires the IRS to establish a program that allows a taxpayer to receive the allowable tax credit amount for flood insurance premiums (based on tax return information for the most recent tax year available) in advance.
Latest Action
Read twice and referred to the Committee on Finance.