Sponsors (2)
The bill makes flood insurance (including NFIP fees) cheaper for many homeowners by allowing an above‑the‑line deduction that also helps non‑itemizers, but it reduces federal revenue and adds tax complexity while excluding higher‑income filers.
Homeowners who buy flood insurance (including NFIP fees and certain surcharges) can deduct those premiums above the line, lowering their adjusted gross income and reducing taxable income.
Taxpayers who do not itemize — including many lower- and middle-income households — benefit because the deduction applies before itemizing, which can preserve or increase eligibility for income‑based tax credits and other means‑tested benefits.
Provides targeted tax relief for households in flood-prone areas by explicitly covering NFIP fees and certain surcharges as deductible costs, lowering the net cost of maintaining flood insurance.
The deduction reduces federal revenue, which could increase the budget deficit or force offsetting spending cuts or tax increases that affect all taxpayers.
Implementing the new above‑the‑line deduction requires new code language, AGI ordering rules, and multiple conforming amendments, increasing complexity for taxpayers, preparers, and the IRS and raising compliance and administrative costs.
Taxpayers with AGI above $200,000 ($400,000 joint) are excluded from the deduction, so higher‑income homeowners receive no relief, creating a hard cutoff that limits who benefits.
Based on analysis of 2 sections of legislative text.
Creates an above-the-line deduction for qualified flood insurance premiums with an AGI phaseout ($200k single/$400k joint).
Official title: Amend the Internal Revenue Code of 1986 to provide an above-the-line deduction for flood insurance premiums.
Introduced July 16, 2025 by Richard Lynn Scott · Last progress July 16, 2025
Creates a new above-the-line individual income tax deduction for qualified flood insurance premiums paid or incurred on taxpayer-owned property, with a phaseout for higher-income taxpayers. The change inserts the deduction into the AGI definition and makes conforming amendments to related Code provisions; it applies to taxable years beginning after enactment.