Sponsors (2)
Creates a tax-preferred READY account to help homeowners pay for disaster mitigation and recovery and encourage verifiable resilience projects, but its modest annual cap, eligibility/administration rules, and skew toward taxpayers with taxable income limit its reach and can impose steep penalties or access costs for others.
Homeowners can save up to $4,500 per year in a tax-deductible READY account to pay qualified home disaster mitigation and recovery costs, lowering their out-of-pocket costs for hardening or repairing a primary residence.
Distributions from READY accounts used for qualified mitigation or recovery are excluded from gross income, reducing taxable income for homeowners making eligible repairs or resilience upgrades.
The bill requires a definition and certification process (Secretary with FEMA consultation and qualified professionals) that targets verifiable mitigation measures, encouraging implementation of concrete resilience projects like impact windows and improved roofing.
The $4,500 annual cap (even when indexed) may be insufficient for major disaster repairs, leaving homeowners with large recovery costs still exposed to substantial out-of-pocket expenses.
The tax benefit primarily helps taxpayers with taxable income, so low-income homeowners or those who owe little or no federal income tax receive little or no advantage, worsening equity in disaster recovery support.
Nonqualified distributions are taxable and subject to a 20% additional tax, creating risk of large unexpected tax bills for account holders who withdraw funds for other needs or make mistakes about qualified uses.
Based on analysis of 2 sections of legislative text.
Creates tax-favored READY accounts allowing individuals to deduct up to $4,500/year for qualified home disaster mitigation and recovery costs, with IRA/HSA-like rules and penalties.
Introduced June 4, 2025 by Richard Lynn Scott · Last progress June 4, 2025
Creates a new tax-favored personal savings account for paying qualified home disaster mitigation and recovery costs. Individuals may deduct up to $4,500 of contributions per year (indexed for inflation after 2026); account earnings and qualified distributions are tax-exempt, while nonqualified distributions are taxed and generally subject to a 20% additional tax. The accounts follow many existing IRA/HSA rules for rollovers, excess contributions, divorce transfers, and post-death treatment; trustees must be banks or approved persons and the Treasury may require reporting and issue regulations. Changes to several Internal Revenue Code provisions are made to integrate the new account, and the rules apply to taxable years beginning after enactment.