The Disaster Mitigation and Tax Parity Act excludes from taxable income payments received from state catastrophe loss mitigation programs for property improvements that reduce windstorm, earthquake, flood, or wildfire damage. This extends existing federal tax exclusions for hazard mitigation payments to include state-level programs, without increasing property basis.
Latest Action
Read twice and referred to the Committee on Finance.
AI Summary
Plain-English explanation of this bill
The Disaster Mitigation and Tax Parity Act excludes from taxable income payments received from state catastrophe loss mitigation programs for property improvements that reduce windstorm, earthquake, flood, or wildfire damage. This extends existing federal tax exclusions for hazard mitigation payments to include state-level programs, without increasing property basis.
Last updated: 1/4/2026
Official Summary
Congressional Research Service summary
<p><strong>Disaster Mitigation and Tax Parity Act of 2025</strong></p><p>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.</p><p>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.</p><p>The bill allows a similar exclusion from gross income for certain payments received by an individual from a program established by</p><ul><li>a state (or any political subdivision or instrumentality of the state),</li><li>a joint powers authority, or</li><li>an entity that was established by the state to provide essential or basic property insurance and is regulated by the state.</li></ul><p>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.</p><p>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.</p>
Key Points
Main provisions of the bill
Excludes state disaster mitigation payments from income
Encourages participation in state mitigation programs
How This Impacts Americans
Potential effects on citizens and communities
This bill creates tax parity between federal and state disaster mitigation programs. When homeowners receive payments to strengthen their property against disasters, the tax treatment should not vary based on the programs source. The exclusion encourages participation in mitigation programs, which can reduce overall disaster losses and insurance claims. By not increasing basis, it simplifies tax treatment while still providing the exclusion benefit.
Policy Areas
Primary Policy Area
Taxation
Scope & Jurisdiction
Jurisdiction Level
federal
Congressional Session
119th Congress
Citation Reference
336, 119th Congress (2025). "Disaster Mitigation and Tax Parity Act of 2025". Source: Voter's Right Platform. https://votersright.org/bills/118-s-336
