Summary

Creates a new tax-advantaged savings vehicle for homeowners to save and pay for home disaster mitigation and recovery costs. Individuals may deduct contributions (up to $4,500 per person per year, inflation‑adjusted after 2026) into specially governed trust accounts; qualified withdrawals for covered mitigation and repair expenses are tax-free, while nonqualified withdrawals are taxable and carry a 20% additional tax.

Key Points

• Creates a new tax‑favored trust account to pay for home disaster mitigation and recovery expenses.
• Contributions deductible up to $4,500 per individual per year, indexed for inflation after 2026.
• Qualified distributions for covered mitigation and repair costs are tax‑free; nonqualified withdrawals are taxable plus a 20% additional tax.
• Accounts must be U.S. trusts with a bank or approved trustee; assets cannot be commingled except in common funds.
• Rollovers, transfers on divorce, and special post‑death rules are permitted; rollovers limited to once per 12 months.
• Accounts are added to existing excise tax and prohibited transaction frameworks, with a narrow exemption if disqualification follows account termination rules.
• Secretary of the Treasury may prescribe reporting requirements and regulations to implement the program.
• Conforming amendments modify multiple Internal Revenue Code provisions to integrate the new account type.

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