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The bill makes flood insurance premiums tax‑deductible for eligible insured homeowners—particularly helping lower‑income owners and equalizing NFIP vs. private coverage—at the cost of reduced federal revenue and leaving renters, the uninsured, and higher‑income filers without relief.
Homeowners who buy qualifying flood insurance and meet the eligibility rules can deduct their flood insurance premiums from taxable income, lowering their federal tax liability and reducing the after‑tax cost of coverage while aligning tax treatment between NFIP and qualifying private policies.
Low‑ and moderate‑income homeowners under the AGI thresholds get direct tax relief for a disaster‑related expense, improving short‑term financial resilience after floods.
All taxpayers face lower federal revenue because deductible flood insurance premiums reduce taxable income, which could increase deficits or force tradeoffs with other spending if not offset.
Renters and uninsured property owners receive no direct tax relief because the benefit applies only to those who purchase qualifying flood insurance.
Homeowners with AGI above the specified thresholds (over ~$200k single, ~$400k joint) receive no benefit, so higher‑income households still bear the full premium cost and are excluded from this tax relief.
Based on analysis of 2 sections of legislative text.
Adds an above-the-line individual deduction for qualified flood insurance premiums, phased out above $200,000 AGI ($400,000 joint).
Introduced July 17, 2025 by Byron Donalds · Last progress July 17, 2025
Creates an above-the-line individual tax deduction for qualified flood insurance premiums paid or incurred on property owned by the taxpayer, with the deduction phased out for taxpayers with adjusted gross income above $200,000 ($400,000 for joint filers). The deduction covers NFIP chargeable risk premiums, private flood insurance (as defined in the Flood Disaster Protection Act of 1973), the Federal Policy Fee, certain NFIP surcharges, and a statutory NFIP premium surcharge, and takes effect for taxable years beginning after enactment.