Sponsors (2)
Introduced July 16, 2025 by Richard Lynn Scott · Last progress July 16, 2025
The bill creates an above‑the‑line deduction for flood insurance premiums that gives many homeowners immediate tax relief and lowers AGI for other benefits, but it reduces federal revenue, excludes high‑income filers, and adds some tax‑filing complexity.
Homeowners who pay flood insurance (including NFIP and qualifying private policies and certain federal surcharges) can deduct qualified flood insurance premiums as an above-the-line deduction, lowering taxable income whether or not they itemize.
Taxpayers who claim the deduction will have a lower adjusted gross income (AGI), which can increase take-home pay and improve eligibility for other income‑tested tax benefits or credits.
The deduction reduces federal revenue, which could increase deficits or require cuts to other federal programs or new offsets.
The new deduction and conforming amendments introduce additional tax‑filing complexity, potentially raising compliance costs and preparation burden for taxpayers and preparers.
High‑income filers (AGI over $200,000 single / $400,000 joint) are excluded from the deduction, so wealthier homeowners receive no tax relief under this provision.
Based on analysis of 2 sections of legislative text.
Adds an above-the-line federal income tax deduction for qualified flood insurance premiums, phased out above $200,000 AGI ($400,000 joint).
Creates an above-the-line federal income tax deduction for qualified flood insurance premiums paid on property owned by the taxpayer. The deduction applies to NFIP chargeable risk premiums, certain NFIP surcharges, the Federal Policy Fee, and private flood insurance premiums, but phases out for taxpayers with adjusted gross income above $200,000 ($400,000 for joint filers). The change is added to the Internal Revenue Code and applies to taxable years beginning after the date of enactment.