Legislation introduced Friday would exclude qualified catastrophe mitigation payments from gross income, officials said.
The legislation, Disaster Mitigation and Tax Parity Act of 2025, was introduced by U.S. Sens. Thom Tillis (R-NC), Alex Padilla (D-CA), Bill Cassidy (R-LA) and Adam Schiff (D-CA). The bill would exclude those payments made under a state-based catastrophe loss mitigation program and defines “qualified catastrophe mitigation payment” as “any amount received for making improvements to an individual’s property for the sole purpose of reducing the damage that would be done to such property by a windstorm, earthquake, flood, or wildfire.”
“This commonsense legislation takes a critical step toward empowering individuals and communities to better protect themselves from the devastating effects of natural disasters like Hurricane Helene,” Tillis said. “By excluding qualified catastrophe mitigation payments from income tax, we are incentivizing property owners to make the necessary improvements that reduce damage and save lives. This proactive approach to disaster preparedness not only helps families rebuild faster but strengthens our resilience in the face of future disasters.”
The bill is co-sponsored by U.S. Sens. John Hickenlooper (D-CO), Michael Bennett (D-CO), Jeff Merkley (D-OR), Amy Klobuchar (D-MN), John Kennedy (R-LA), Roger Wicker (R-MS), and Ted Budd (R-NC), and is endorsed by North Carolina Insurance Commissioner Mike Causey and the North Carolina Insurance Association.
“Passing federal legislation that would ensure all state-funded, pre-disaster mitigation grants are tax-free would allow these grants to have the maximum impact,” Causey said. “These mitigation grants protect homes and have a direct impact on insurers and the claims they pay for such disasters, which is critical for ensuring an insurance market that is stable and available and affordable for homeowners.”