Tax break for disaster-proofing your home — if your state has the program

What it does

This bill amends the tax code to exclude from taxable income any money that individuals receive from state-run disaster mitigation programs to improve their property against windstorms, earthquakes, floods, or wildfires. The exclusion applies retroactively to tax years beginning after December 31, 2021, and allows people to claim it on amended returns.

Why we flagged it

The bill's operative mechanism is a tax exclusion for state-funded property hardening payments. It is functionally a tax incentive for disaster mitigation, not a direct subsidy or new program — it removes a tax barrier to existing state assistance.

What the text implies

• Retroactive application to 2021 creates a multi-year tax-filing window, potentially generating significant amended-return volume at IRS and state tax agencies.
• The exclusion applies only to state-administered programs with state insurance oversight, potentially excluding private or federal disaster mitigation assistance from the same tax benefit.
• No basis increase (property value step-up) means homeowners cannot later claim depreciation or capital gains relief on the hardened improvements, limiting the tax benefit to the initial exclusion.
• The bill does not cap the amount of mitigation payments excluded, potentially allowing high-value property owners to exclude large sums if state programs permit.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

Homeowners and property owners who invest in disaster-resistant improvements receive tax relief on state mitigation payments, reducing the after-tax cost of resilience measures. This incentivizes private investment in disaster preparedness without creating a new subsidy — it simply exempts existing state assistance from federal taxation.

Who stands to gain

• property owners in disaster-prone regions
• state-run property insurance pools and catastrophe loss mitigation programs
• construction and home-improvement contractors (indirect, via increased demand for resilience upgrade

Named in the bill

Internal Revenue Code Section 139, State insurance departments, Joint powers authorities, Property insurance pools, Secretary of the Treasury

Where it stands

12 cosponsors: 7 Democrats, 5 Republicans.

• Jan 30, 2025 — Introduced · Congress.gov: “Introduced in Senate”
• Jan 30, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”

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

Money around this bill

9 lobbying clients named this bill on 17 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $8,005,758 in lobbying spend. A filing names 34 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 89% of bills with at least one filing.

Thom Tillis, the sponsor, reported $973,475 in PAC receipts in the 2026 cycle.

• American Property Casualty Insurance Association — $3,540,000 on 2 filings
• Reinsurance Assn of America — $1,100,000 on 3 filings
• Allstate Insurance Company — $1,050,000 on 2 filings
• National Association of Mutual Insurance Companies — $1,005,758 on 2 filings
• Nationwide Mutual Insurance Company — $670,000 on 1 filing

Lobbying Disclosure Act filings through Jul 23, 2026. A filing shows who paid to lobby on a bill it names, not what changed.