Sponsors (9)
The bill creates tax-preferred READY accounts to encourage and lower the cost of homeowner disaster mitigation and recovery, but the benefits mainly accrue to those able to save, reduce federal revenue, and introduce penalties and administrative hurdles that could limit access and increase complexity.
Homeowners can contribute to READY accounts and deduct up to $4,500 per year (indexed after 2025), and distributions used for qualifying mitigation or recovery expenses are excluded from gross income, lowering taxable costs for disaster repair and home-hardening.
Encourages preventative, safety-improving investments (e.g., impact-resistant windows, roof strengthening) that reduce future disaster damage and lower recovery costs and risks for families.
Includes rollover and spousal-transfer rules so tax benefits are preserved after divorce or account-owner death, helping families retain savings for home recovery.
Taxpayers who withdraw READY account funds for nonqualified purposes face inclusion in gross income plus a 20% additional tax on the amount, creating a steep penalty risk for account holders.
Low- and moderate-income homeowners who lack spare cash may be unable to take advantage of the deduction, making the benefit skewed toward higher-income savers and potentially widening inequities in disaster resilience.
The deduction and tax exclusion reduce federal revenue, which could increase deficits or force trade-offs with other spending priorities or taxes.
Based on analysis of 2 sections of legislative text.
Creates deductible READY accounts for saving to pay qualified home disaster mitigation and recovery expenses, with a $4,500 annual contribution limit indexed after 2025.
Introduced January 15, 2025 by Laurel Lee · Last progress January 15, 2025
Creates a new tax-preferred savings account called a READY account that lets individuals deduct cash contributions (up to $4,500 per year, indexed for inflation after 2025) when the money is used for qualified home disaster mitigation and recovery expenses. The law sets rules for who can serve as trustee, limits on investments and commingling, and requires that account balances be nonforfeitable.