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The bill provides targeted tax relief to homeowners and improves AGI treatment to help more taxpayers qualify for other credits, but it reduces federal revenue and favors homeowners over renters, potentially increasing inequality.
Homeowners who pay principal-residence insurance can reduce their taxable income by up to $10,000, lowering their federal tax liability.
Making the insurance deduction an adjustment to AGI increases taxpayers' eligibility for other means-tested tax benefits and credits that use AGI thresholds, benefiting middle-class families and others near phaseouts.
All taxpayers face reduced federal revenue because the deduction lowers tax receipts, which could increase deficits or require cuts/offsets to other government services.
Renters and households without homeowners insurance receive no benefit, so the policy disproportionately aids homeowners and may widen tax-benefit inequality.
Based on analysis of 2 sections of legislative text.
Creates an above-the-line deduction allowing individuals to deduct up to $10,000 of annual homeowners insurance premiums for their principal residence.
Introduced January 8, 2025 by Richard Lynn Scott · Last progress January 8, 2025
Allows taxpayers to deduct up to $10,000 of annual homeowners insurance premiums for their principal residence as an adjustment to gross income, lowering taxable income. The bill inserts a new provision into the Internal Revenue Code defining “qualified insurance premiums” and makes the deduction effective for taxable years ending after enactment.