Insurance; deductions from taxable income for contributions by taxpayers to catastrophe savings accounts and interest earned on such accounts; provide

Homeowners get disaster tax breaks with limits

The law takes effect July 1, 2025, and its tax rules apply to tax years beginning January 1, 2026, or later. Georgia resident taxpayers can deduct contributions to a designated catastrophe savings account from income subject to Georgia tax. Account interest is also exempt from Georgia income tax. The account must be a regular savings or money market account labeled for qualified catastrophe expenses. Only one account is allowed per taxpayer and per primary home. Total contributions—not a fresh limit each year—are capped at $2,000 when the insurance deductible is $1,000 or less. For higher deductibles, the cap is twice the deductible or $25,000, whichever is lower. If the policy has multiple deductibles, the highest applies. Homeowners who choose not to insure their primary home have a $250,000 cap, limited further by the home's market value. Qualified costs include the insurance deductible and uninsured costs to repair or replace disaster damage to the primary home. Covered events include windstorms, cyclones, earthquakes, hurricanes, ice storms, tornadoes, high winds, floods, and hail storms. Other weather events qualify when the Governor declares a disaster or emergency. Withdrawals are tax-free when qualified costs during the tax year equal or exceed total withdrawals. Otherwise, the excess and account interest are included in income to the extent of that excess. Excess contributions must be withdrawn and included in income in the withdrawal year. After the owner dies, the recipient owes income tax on the account unless the recipient is the surviving spouse. After that spouse dies, the next recipient must include the account balance in income. Georgia's Department of Revenue must issue rules to administer these accounts.