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H.R. 1849 · House bill · 119th Congress
This bill excludes from gross income, for federal income tax purposes, payments received from a state catastrophe loss mitigation program by an individual for the purpose of making improvements to the individual’s property that mitigate the impact of certain disasters.
Under current law, individuals may exclude from gross income, for federal income tax purposes, payments received under the Robert T. Stafford Disaster Relief and Emergency Assistance Act or the National Flood Insurance Act (as in effect on April 15, 2005) for hazard mitigation. (Some exceptions apply.) Further, under current law, such payments do not increase the basis of the property for which the payments are made.
The bill allows a similar exclusion from gross income for certain payments received by an individual from a program established by
a state (or any political subdivision or instrumentality of the state),
a joint powers authority, or
an entity that was established by the state to provide essential or basic property insurance and is regulated by the state.
Under the bill, such payments must be for making improvements to the individual’s property for the sole purpose of reducing damage that would be done to the property by a windstorm, earthquake, flood, or wildfire.
Finally, the bill provides that such payments from a state catastrophe loss mitigation program do not increase the basis of the property for which the payments are made.
This Act may be cited as the “Disaster Mitigation and Tax Parity Act of 2025”.
(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— for the purpose of making such payments.
(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,
(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.