Sponsors (9)
The bill makes it cheaper for homeowners who can save to invest in FEMA‑certified disaster resilience by creating tax‑favored READY accounts, but it reduces federal revenue, adds administrative complexity, and primarily benefits those with capacity to save while leaving low‑income homeowners at risk of being left out.
Homeowners can contribute up to $4,500 per year to READY accounts and take tax‑free distributions for FEMA‑certified home disaster mitigation or recovery, lowering the after‑tax cost of resilient upgrades and repairs.
Homeowners and state/local governments are incentivized to pursue preventive mitigation (e.g., stronger roofs, reinforcements) because tax‑favored savings are available when measures are certified in consultation with FEMA, which can reduce future disaster losses.
Account rules allowing rollovers and spousal transfers preserve tax benefits through life events (divorce, death) and provide flexibility so families can keep resilience savings intact.
All taxpayers face reduced federal revenues from the new deduction, which could increase pressure for spending cuts or offsets elsewhere in the budget.
Low‑income homeowners who cannot afford the upfront cost to fund certified mitigation measures will be least able to benefit from the deduction, worsening equity of access to resilience incentives.
Taxpayers who take nonqualified distributions will face ordinary income inclusion plus an additional 20% tax on includible amounts, creating a steep penalty risk for people who need funds for other uses or misunderstand rules.
Based on analysis of 2 sections of legislative text.
Creates tax-deductible READY accounts (up to $4,500/year, indexed) for saving toward FEMA-certified home disaster mitigation and recovery; qualified withdrawals are tax-free.
Introduced January 15, 2025 by Laurel Lee · Last progress January 15, 2025
Creates a new tax-advantaged savings account called a READY account that lets individuals deduct up to $4,500 per year (indexed after 2025) for cash contributions used for home disaster mitigation and disaster recovery costs. Qualified distributions from READY accounts are tax-free; nonqualified distributions are taxable and subject to a 20% additional tax on the includible amount. The measure adds READY accounts into existing tax rules (including excess contribution taxes and prohibited transaction rules), requires FEMA consultation and certification for qualified measures and costs, and takes effect for tax years starting after Dec. 31, 2024.