Tax break for flood insurance: who really wins?
H.R. 5504 — Flood Insurance Tax Credit Act of 2025 · Filed by Nydia Velázquez (D-NY) · Introduced Sep 18, 2025 · Referred to committee
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What it does
This bill creates a new federal tax credit allowing homeowners to deduct a portion of their flood insurance costs from their federal income taxes. Homeowners can claim up to $1,500 for federal flood insurance (National Flood Insurance Program), up to $3,000 for private flood insurance (at 50% of actual cost), and up to $600 for contents coverage, with the credit phasing out for higher-income earners. The credit applies only to principal residences and begins in tax year 2026.
Why we flagged it
The bill's operative mechanism is a direct reduction in federal tax liability for a specific class of taxpayers (homeowners with flood insurance), funded by general revenue. This is a targeted tax expenditure benefiting property owners.
What the text implies
- Credit benefits property owners disproportionately; renters in flood-prone areas receive no benefit despite bearing flood risk through higher rents.
- Phaseout thresholds ($50k–$100k) mean middle-income homeowners capture most benefit; very high earners phase out entirely, but upper-middle class captures substantial value.
- Federal flood insurance (NFIP) premiums are often subsidized below actuarial cost; this credit further reduces the effective price, potentially increasing moral hazard and development in high-risk areas.
- Credit is inflation-adjusted after 2026, creating an open-ended long-term federal cost with no sunset or review mechanism.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Homeowners in flood-prone areas gain a direct tax benefit, reducing their out-of-pocket insurance costs. However, the credit is regressive—it phases out for higher earners but still concentrates benefits among property owners (who skew wealthier than renters), and the federal cost is borne by all taxpayers regardless of flood risk exposure.
Who stands to gain
- homeowners in flood-prone areas
- private flood insurance companies (increased demand as credit makes insurance more affordable)
- National Flood Insurance Program (reduced pressure to raise premiums if federal subsidy via tax cred
Named in the bill
Internal Revenue Code of 1986, National Flood Insurance Act of 1968, National Flood Insurance Program (NFIP), House Committee on Ways and Means
Where it stands
- Sep 18, 2025 — Introduced · Congress.gov: “Introduced in House”
- Sep 18, 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
1 lobbying clients named this bill on 2 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $3,540,000 in lobbying spend. A filing names 135 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 0% of bills with at least one filing.
Nydia Velázquez, the sponsor, reported $62,000 in PAC receipts in the 2026 cycle.
- American Property Casualty Insurance Association — $3,540,000 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.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (4,483 characters) on May 21, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Dec 2025 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 22, 2026 · page rendered 2026-10-20.
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