H.R.1849 - Disaster Mitigation and Tax Parity Act of 2025 (119th Congress)
Summary
H.R.1849, the Disaster Mitigation and Tax Parity Act of 2025, aims to amend the Internal Revenue Code of 1986. The key provision is to exclude from gross income any amounts received from state-based catastrophe loss mitigation programs. This exclusion applies to payments made to property owners for improvements that reduce damage from windstorms, earthquakes, or wildfires.
Expected Effects
The bill's passage would result in individuals not having to pay federal income tax on funds received from state programs designed to mitigate losses from natural disasters. This could incentivize more homeowners to invest in preventative measures. It also allows individuals to retroactively claim this exclusion for taxable years beginning after December 31, 2020, through amended tax returns.
Potential Benefits
- Financial Relief: Homeowners in disaster-prone areas would receive financial relief by not being taxed on mitigation funds.
- Incentivizes Mitigation: Encourages property owners to invest in improvements that reduce potential damage from natural disasters.
- Retroactive Application: Allows individuals to claim the exclusion retroactively, providing immediate benefits.
- Supports State Programs: Reinforces the role of state-based programs in disaster preparedness.
- Reduces Disaster Impact: By promoting mitigation, the bill could lessen the overall impact of disasters on communities.
Potential Disadvantages
- Potential for Abuse: The definition of 'qualified catastrophe mitigation payment' could be subject to interpretation and potential abuse.
- Complexity: Adding another exclusion to the tax code increases its complexity.
- Revenue Loss: The federal government will experience a loss in tax revenue due to the exclusion.
- Administrative Burden: Retroactive applicability may create an administrative burden for the IRS.
- Limited Scope: The bill only addresses specific types of natural disasters (windstorm, earthquake, wildfire), potentially excluding other disaster types.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble). By incentivizing disaster mitigation, it aims to promote the well-being of citizens and communities affected by natural disasters. The power to tax and spend for the general welfare is an implied power granted to Congress. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).