Legislation introduced by U.S. Rep. Greg Murphy (R-NC) and Doug LaMalfa (R-CA) would exclude some catastrophe mitigation payments from federal income tax purposes.
The Disaster Mitigation and Tax Parity Act would exempt qualified payments from states to homeowners to help mitigate the impact of weather-related catastrophes from being interpreted as income by the IRS. The bill defines a “qualified catastrophe mitigation payment” as any amount received for making improvements to an individual’s property for the purpose of reducing the damage that would be done to it by a windstorm, earthquake, flood or wildfire.
“Catastrophe mitigation payments used to improve natural disaster resilience should not be treated as a source of income, and North Carolinians should not be taxed for them,” Murphy said. “Eastern North Carolina understands how deadly and damaging hurricanes can be, and the costs associated with rebuilding. Adequate preparation for storms is a valuable investment and should be strongly incentivized, not taxed. This bill empowers individuals to protect themselves before disaster strikes, reducing or eliminating entirely, the risk of catastrophic damage to their homes.”
In his state, the Strengthen Your Roof program has provided more than 4,500 grants to households to fortify roofs from potential wind damage. Murphy said the IRS interpreted those grants as income.
“The North Carolina Insurance Underwriting Association (NCIUA) has invested over $100 million through programs such as Strengthen Your Roof grants to help policyholders fortify their homes and build a stronger, storm-ready North Carolina,” Gina Hardy, CEO of the North Carolina Joint Underwriting Association, said. “Adequate preparation for storms is a valuable investment that should be incentivized, not taxed. However, these resilience grants are currently subject to federal taxation, reducing the funds available for homeowners to strengthen their homes and better protect against catastrophic events.”