Sponsors (13)
The bill encourages homeowner resilience by making State-qualified catastrophe-mitigation payments nontaxable (including retroactively), trading off reduced federal revenue, possible higher taxable gains on future home sales, and added administrative burdens for state programs.
Homeowners who receive State-qualified catastrophe mitigation payments can exclude those amounts from taxable income, lowering their federal tax bills.
Property owners can receive funding for windstorm, earthquake, flood, or wildfire mitigation improvements without immediate federal income tax, making resilience investments more financially attractive.
Taxpayers can claim the exclusion retroactively (including by amended return) for eligible State mitigation payments since 2022, allowing people who already received payments to get tax relief.
Homeowners who exclude mitigation payments cannot increase their property tax basis by those amounts, which could raise taxable capital gain when they later sell the property.
Making more catastrophe-mitigation payments nontaxable reduces federal tax revenue, which could increase deficits or require offsetting spending cuts or tax increases.
State-created market-of-last-resort entities and mitigation programs may face increased administrative requirements to certify qualifying payments, adding complexity and costs for state program sponsors and recipients.
Based on analysis of 2 sections of legislative text.
Excludes from taxable income state-established payments to property owners for improvements that reduce damage from windstorm, earthquake, flood, or wildfire, with retroactive claim allowed.
Introduced January 30, 2025 by Thomas Roland Tillis · Last progress January 30, 2025
Excludes from federal gross income certain state-paid or state-established payments to property owners for improvements that reduce damage from windstorms, earthquakes, floods, or wildfires. The exclusion applies to amounts designated as “qualified catastrophe mitigation payments,” follows existing basis-adjustment rules, and can be claimed retroactively for tax years beginning after December 31, 2021.