Disaster Mitigation and Tax Parity Act of 2025

Tax break for homeowners' mitigation payments

If enacted, homeowners who received state catastrophe-mitigation payments to make property improvements would be able to exclude those payments from their taxable income. Only payments from programs set up by a State, a joint powers authority, or a state-created insurance market entity under state oversight would qualify. Payments must be used only to reduce damage from windstorm, earthquake, flood, or wildfire and do not include qualified disaster mitigation payments. Excluded amounts would not increase your property's tax basis. The exclusion would apply to tax years beginning after December 31, 2021, and Treasury would be required to let people claim the exclusion for earlier years, including by amended return.