Tax break for homeowners shifts flood insurance costs to renters and the poor

What it does

This bill creates a new federal tax deduction allowing individuals to deduct qualified flood insurance premiums from their taxable income. The deduction applies to premiums paid for coverage under the National Flood Insurance Program or private flood insurance, but only for taxpayers earning less than $200,000 annually ($400,000 for joint filers). The deduction reduces the amount of income subject to federal tax, effectively subsidizing flood insurance costs for middle-income homeowners.

Why we flagged it

The bill's core mechanism is a narrowly scoped income-tax deduction benefiting a specific demographic (homeowners with moderate-to-high incomes) rather than a broad public-health or disaster-relief measure. It functions as a tax expenditure—foregone federal revenue—rather than direct spending or regulatory reform.

What the text implies

• The deduction may reduce federal revenue available for direct flood mitigation, buyout programs, or infrastructure hardening that would benefit lower-income and uninsured populations more broadly.
• By subsidizing insurance premiums for higher-income homeowners, the bill may reduce political pressure to address underlying flood risk through land-use planning or climate adaptation, shifting costs to future taxpayers.
• The income cap ($200k/$400k) excludes high-net-worth individuals who own multiple properties or vacation homes, potentially creating inequitable treatment among property owners.
• Private flood insurers (AIG, FBK, PRU, PFG) benefit from increased demand and premium volume as the deduction makes insurance more affordable, but NFIP (public program) also benefits, creating mixed incentives for private-vs-public insurance competition.

Who it affects

Homeowners below the income cap benefit from lower effective flood insurance costs through tax savings, which may improve flood risk protection access. However, the deduction is regressive—it provides no benefit to renters or lower-income households who cannot afford to itemize or own property, and it shifts the cost of flood risk management from those who benefit (property owners) to the general taxpayer base, potentially increasing taxes elsewhere or reducing public flood mitigation investment

Who stands to gain

• private flood insurance companies (AIG, Assurant, FedNat, Heritage, Universal, Homeowners Choice)
• National Flood Insurance Program (indirect, through increased enrollment)
• homeowners with incomes $100k–$400k in flood-prone areas

Named in the bill

Internal Revenue Code, National Flood Insurance Act of 1968, Flood Disaster Protection Act of 1973, National Flood Insurance Program (NFIP), AIG, Federated National Holding Company (FBK), Homeowners Choice Inc. (HCI), Assurant (AIZ), Prudential Financial (PRU), Principal Financial Group (PFG), Code of Federal Regulations Title 44

Where it stands

• Jul 17, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jul 17, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

3 lobbying clients named this bill on 6 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $4,840,000 in lobbying spend. A filing names 38 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 61% of bills with at least one filing.

Byron Donalds, the sponsor, reported $66,946 in PAC receipts in the 2026 cycle.

• American Property Casualty Insurance Association — $3,540,000 on 2 filings
• United Services Automobile Association — $890,000 on 2 filings
• Independent Insurance Agents & Brokers of America — $410,000 on 2 filings

Lobbying Disclosure Act filings through Jul 22, 2026. A filing shows who paid to lobby on a bill it names, not what changed.