Tax break for disaster-proofing homes—but only if your state has the program
H.R. 1849 — Disaster Mitigation and Tax Parity Act of 2025 · Filed by Doug LaMalfa (R-CA) · 32 cosponsors · Introduced Mar 5, 2025 · Referred to committee
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What it does
This bill amends the tax code to exclude payments from state-run disaster mitigation programs from taxable income. Homeowners and property owners who receive money from state catastrophe loss programs to make improvements that reduce damage from windstorms, earthquakes, or wildfires will no longer owe federal income tax on those payments. The change applies retroactively to 2021 and later.
Why we flagged it
The bill's core function is to exclude state catastrophe mitigation payments from federal taxable income—a targeted tax exclusion benefiting property owners in disaster-prone regions who participate in state resilience programs.
What the text implies
- Retroactive application to 2021 may create significant revenue loss and administrative burden for IRS processing amended returns, with unclear cost to the federal government.
- The exclusion applies only to state-administered programs with state insurance oversight, potentially creating unequal treatment between homeowners in states with robust mitigation programs versus those in states without them.
The full analysis lists 4 implications of this text.
Who stands to gain
property owners in disaster-prone states; state catastrophe loss mitigation programs; state insurance pools and entities