S.35 - Homeowners Premium Tax Reduction Act of 2025 (119th Congress)
Summary
The Homeowners Premium Tax Reduction Act of 2025, introduced as S.35 in the Senate, proposes an amendment to the Internal Revenue Code of 1986. The amendment aims to create an above-the-line deduction for homeowners insurance premiums, capped at $10,000. This would allow individuals to deduct these premiums when calculating their adjusted gross income.
Expected Effects
If enacted, this bill would reduce the tax burden for homeowners by allowing them to deduct a portion of their homeowners insurance premiums. This could lead to increased disposable income for homeowners. The change would be reflected in taxable years ending after the enactment date.
Potential Benefits
- Reduces the tax burden for homeowners by allowing a deduction for insurance premiums.
- Increases disposable income for homeowners, potentially stimulating consumer spending.
- Simplifies tax filing for homeowners by providing an above-the-line deduction.
- Could incentivize more people to obtain homeowners insurance, leading to greater financial security.
- Provides financial relief, especially for homeowners in areas with high insurance costs.
Most Benefited Areas:
Potential Disadvantages
- May increase the complexity of the tax code, despite being an above-the-line deduction.
- Could disproportionately benefit higher-income homeowners who are more likely to itemize deductions.
- May reduce federal tax revenue, potentially impacting government programs.
- The $10,000 cap may not fully cover premiums in high-cost areas, limiting the benefit for some homeowners.
- Could create an incentive for homeowners to purchase more expensive insurance policies.
Most Disadvantaged Areas:
Constitutional Alignment
The bill aligns with the general welfare clause of the Constitution (Preamble), as it aims to improve the financial well-being of homeowners. Article I, Section 8 grants Congress the power to lay and collect taxes, duties, imposts, and excises, implying the authority to create tax deductions. 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).