Sponsors (13)
This bill makes State‑provided disaster mitigation payments tax‑free (including retroactively), encouraging resilience investments and giving homeowners direct financial relief, at the cost of some tax‑filing complexity, reduced federal revenue, and unequal treatment of recipients of non‑State grants.
Homeowners who receive State-created or State‑regulated mitigation payments (for wind, earthquake, flood, or wildfire hardening) will not have those payments counted as taxable income, increasing their net benefit from resilience upgrades.
State and local mitigation programs (including market-of-last-resort entities) will be more attractive to recipients because payments from those programs are excluded from federal taxable income, likely boosting participation in resilience and hazard-hardening projects.
Eligible taxpayers (including homeowners) can claim the exclusion retroactively — including by filing amended returns for years after 2021 — so people who already paid tax on past mitigation payments can recover taxes paid.
Recipients of mitigation payments who previously deducted costs or adjusted basis may face accounting and filing complexity to reconcile past returns and benefits.
The exclusion applies only to payments from State‑created or State‑regulated programs, so recipients of similar private or federal mitigation grants may remain taxable on those payments, creating unequal tax treatment.
Excluding these payments from taxable income reduces federal revenue modestly, which could slightly increase the deficit or reduce funding available for other federal programs.
Based on analysis of 2 sections of legislative text.
Excludes certain state-program payments to property owners for wind, earthquake, flood, or wildfire mitigation from federal gross income and allows retroactive claims.
Introduced January 30, 2025 by Thomas Roland Tillis · Last progress January 30, 2025
Excludes certain state program payments to property owners for mitigation work (windstorm, earthquake, flood, wildfire) from federal gross income, so recipients generally won't pay federal income tax on those payments. The change applies to taxable years beginning after December 31, 2021, and Treasury must allow taxpayers to claim the exclusion retroactively (including by amended return). The bill defines "qualified catastrophe mitigation payments" as amounts paid to property owners solely to reduce damage from those perils, applies the current-law rule that such payments do not increase the property's tax basis, and makes conforming edits to related tax code cross-references.