Bill Summary
The **Disaster Mitigation and Tax Parity Act of 2025** aims to amend the Internal Revenue Code of 1986 to allow individuals to exclude from their gross income any amounts received from state-based catastrophe loss mitigation programs. Specifically, the legislation defines "qualified catastrophe mitigation payments" as funds received to make improvements to property that reduce damage from natural disasters such as windstorms, earthquakes, or wildfires.
The bill includes provisions that clarify the types of entities eligible to administer these programs, including state governments and public instrumentalities. Additionally, it specifies that the receipt of these payments shall not increase the tax basis of the property involved. The amendments will apply to taxable years starting after December 31, 2020, and will allow individuals to retroactively claim the exclusion by filing amended returns.
Possible Impacts
Here are three examples of how the proposed "Disaster Mitigation and Tax Parity Act of 2025" could affect people:
1. **Financial Relief for Property Owners**: Homeowners who receive payments from state-based catastrophe loss mitigation programs can benefit significantly. These payments, which are aimed at funding improvements to their properties to mitigate damage from disasters like windstorms, earthquakes, or wildfires, will not be counted as taxable income. This means that homeowners can use these funds without the fear of increasing their tax burden, thereby allowing them to invest more in necessary improvements and enhancing the resilience of their properties.
2. **Encouragement for Mitigation Investments**: By excluding these payments from gross income, the legislation incentivizes property owners to take proactive steps in disaster preparedness. Knowing that the financial assistance they receive for mitigation efforts will not be taxed may lead more individuals to participate in these programs. This can result in increased adoption of disaster-resistant construction practices and improvements, ultimately reducing future damage and recovery costs for both homeowners and state disaster response agencies.
3. **Support for State Programs**: States and local governments can promote and expand their catastrophe loss mitigation programs, knowing that the financial assistance they provide will not impose a tax liability on the recipients. This could lead to more robust funding for disaster resilience initiatives, encouraging local governments to create or enhance programs that support residents in reducing their vulnerability to natural disasters. Ultimately, this could foster a safer community environment and lower overall costs associated with disaster recovery in the long run.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1849 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 1849
To amend the Internal Revenue Code of 1986 to provide for the exclusion
from gross income of amounts received from State-based catastrophe loss
mitigation programs.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 5, 2025
Mr. LaMalfa (for himself, Mr. Thompson of California, Mr. Murphy, Ms.
Brownley, Mr. Rouzer, Mr. Davis of Illinois, Mr. Fitzgerald, Ms.
Pettersen, Mr. Higgins of Louisiana, Mr. Peters, Mr. Mullin, Ms. Chu,
Ms. Sewell, and Mr. Valadao) introduced the following bill; which was
referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide for the exclusion
from gross income of amounts received from State-based catastrophe loss
mitigation programs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Disaster Mitigation and Tax Parity
Act of 2025''.
SEC. 2. EXCLUSION OF AMOUNTS RECEIVED FROM STATE-BASED CATASTROPHE LOSS
MITIGATION PROGRAMS.
(a) In General.--Section 139 of the Internal Revenue Code of 1986
is amended by redesignating subsection (h) as subsection (i) and by
inserting after subsection (g) the following new subsection:
``(h) State-Based Catastrophe Loss Mitigation Programs.--
``(1) In general.--Gross income shall not include any
amount received by or paid for the benefit of an individual as
a qualified catastrophe mitigation payment under a program
established by--
``(A) a State or any political subdivision or
public instrumentality thereof,
``(B) a joint powers authority, or
``(C) an entity created by State law to ensure the
availability of an adequate market of last resort for
essential property insurance or basic property
insurance, over which a State agency or State
department of insurance has regulatory oversight,
for the purpose of making such payments.
``(2) Qualified catastrophe mitigation payment.--For
purposes of this section, the term `qualified catastrophe
mitigation payment' means any amount which is received by or
paid for the benefit of the owner of any property to make
improvements to such property for the sole purpose of reducing
the damage that would be done to such property by a windstorm,
earthquake, or wildfire.
``(3) No increase in basis.--Rules similar to the rules of
subsection (g)(3) shall apply in the case of this
subsection.''.
(b) Conforming Amendments.--
(1) Section 139(d) of the Internal Revenue Code of 1986 is
amended by striking ``and qualified'' and inserting ``,
qualified catastrophe mitigation payments, and qualified''.
(2) Section 139(i) of such Code (as redesignated by
subsection (a)) is amended by striking ``or qualified'' and
inserting ``, qualified catastrophe mitigation payment, or
qualified''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2020.
(2) Retroactive applicability.--The Secretary of the
Treasury, or the Secretary's delegate, shall provide an
opportunity for individuals to claim the exclusion from gross
income under section 139(h) of the Internal Revenue Code of
1986, as added by this section, including by amended return.
<all>