The bill, if passed, would significantly impact tax regulations related to disaster relief and the financial responsibilities of individuals undertaking risk mitigation actions on their properties. By establishing this tax exclusion, it encourages homeowners and property owners to invest in improvements that safeguard their properties against future disasters, thus helping communities build resilience against climate-related events. This legislative change aligns with broader federal goals of enhancing disaster preparedness and response through practical financial incentives.
Summary
SB1953, titled the 'Disaster Mitigation and Tax Parity Act of 2023,' proposes amendments to the Internal Revenue Code of 1986 to exclude amounts received from state-based catastrophe loss mitigation programs from gross income. This bill is introduced in the Senate with the intent to provide financial relief to individuals who suffer from catastrophes, allowing them to receive payments for mitigative improvements without the burden of income tax consequences. The exclusion is aimed at payments that help property owners minimize damage from disasters such as windstorms, earthquakes, or wildfires.
Contention
Notable points of contention around SB1953 may arise regarding the specifics of the programs eligible for the exclusion and the criteria set for what constitutes a qualified catastrophe mitigation payment. Some lawmakers and stakeholders might raise concerns about the risk of misuse, where funds intended for legitimate disaster mitigation purposes are instead utilized for non-qualifying endeavors. Additionally, there may be debates over the potential implications for state budgets and whether the creation of such programs might lead to increased or decreased fiscal burdens on state governments.
Emergency Savings Accounts Act of 2023 This bill allows an individual taxpayer occupying a residence a deduction from gross income for up to $5,000 of amounts paid into such taxpayer's emergency savings account. The bill defines emergency savings account as an account established exclusively to pay the qualified disaster and public health emergency expenses of the account beneficiary. The bill defines qualified disaster and public health emergency expenses as disaster mitigation expenses, disaster recovery expenses, public health emergency expenses, and unemployment-related expenses.