Sponsors
The bill lowers the net cost of flood insurance for primary-residence owners—especially low- and moderate-income households—to encourage insurance uptake and reduce disaster losses, at the cost of increased federal spending, exclusion of non-primary properties, and some added complexity around phaseouts.
Homeowners with required flood insurance on their principal residence can reduce their federal income tax liability by up to $5,100 (combined component caps) for qualifying premiums, lowering their after-tax cost of insurance.
Low- and moderate-income taxpayers receive larger or full credit amounts because the credit phases out gradually, directing more benefit to lower earners and improving progressivity of the relief.
Homeowners (principal-residence owners) may be more likely to buy or keep flood insurance because the net cost is lowered, reducing out-of-pocket disaster losses and encouraging property protection.
All taxpayers (and federal budget stakeholders) face higher federal spending because providing a refundable/available credit to non-itemizers increases the budget cost, which could pressure future taxes or other spending priorities.
Owners of non-primary properties (secondary homes and rental properties) cannot claim the credit, so landlords and second-home owners continue to bear the full cost of required flood insurance.
Middle- and higher-income homeowners near the phaseout thresholds get reduced or uncertain benefits, complicating tax planning and leaving some households with less relief than others.
Based on analysis of 2 sections of legislative text.
Creates a nonrefundable federal tax credit for flood insurance premiums on a taxpayer’s principal residence, with caps, income phaseouts, and inflation indexing, effective for tax years after 2025.
Introduced September 18, 2025 by Nydia M. Velázquez · Last progress September 18, 2025
Creates a new, nonrefundable individual income tax credit for flood insurance premiums paid on a taxpayer’s principal residence for tax years beginning after December 31, 2025. The credit combines three parts: NFIP (Federal) flood insurance premiums up to $1,500, 50% of private flood insurance premiums up to $3,000, and Federal contents coverage premiums up to $600, with income-based phasedowns and future inflation adjustments.