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Creates a federal grant program to help states and tribal governments pay for pre-disaster hazard-mitigation projects at individual homes, and adds tax incentives and exclusions to encourage such work. The bill caps household grants, sets income eligibility limits, lists eligible mitigation activities, requires state plans and insurer consultation, and establishes a tax credit plus exclusions so mitigation payments are not taxed. Also expands income exclusions for certain emergency agricultural payments and state mitigation payments, and creates a 30% tax credit for qualifying mitigation expenditures (with rules for business vs. personal use, basis reduction, and coordination with state reimbursements). Timing rules apply for enactment and taxable years beginning after 2025 as specified.
The bill expands tax incentives and income exclusions to lower the up-front cost of disaster-mitigation and emergency relief—boosting resilience and preserving aid value for homeowners, farmers, and small businesses—while leaving gaps in funding sufficiency, creating administrative complexity, and shifting some future tax burden to property sellers and federal budgets.
Homeowners and property owners (including small businesses) can claim a new 30% tax credit for qualifying disaster-mitigation improvements, materially lowering their after-tax cost to make buildings more resilient and reducing future disaster losses.
Homeowners receiving State or federal household-level mitigation grants can exclude those payments from federal gross income, increasing the net value of mitigation assistance and encouraging more resilience investments.
States and Tribal governments receive federal grants, technical assistance, and FEMA-set mitigation standards to run household-level mitigation programs, improving local disaster-resilience capacity and the quality/effectiveness of mitigation work.
Recipients of excluded mitigation payments or tax credits must reduce the tax basis of their property by the excluded/credited amount, which can meaningfully increase taxable gains when they later sell the property.
The program's $10,000 (CPI‑adjusted) per-household cap is likely insufficient for major mitigation tasks (e.g., elevation, structural retrofits), leaving many homeowners to cover large remaining costs.
Complex administrative requirements and new tax rules will create compliance costs and coordination burdens for the IRS, state tax agencies, USDA, and program administrators and may cause enrollment or implementation problems in lower-capacity jurisdictions.
Introduced February 6, 2025 by Michael Thompson · Last progress February 6, 2025