Official Summaries

Disaster Mitigation and Tax Parity Act of 2025

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.

Current Full Text

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1849 Introduced in House (IH)]

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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.
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