Us Congress House Bill HB4070

Us Congress 2023-2024 Regular Session

• Introduced: 6/13/23
• Refer: 6/13/23

Caption

Disaster Mitigation and Tax Parity Act of 2023

Impact

The proposed bill could have significant implications for state laws and disaster management practices. It aims to provide clear financial incentives for homeowners to engage in mitigation efforts. Such measures could lead to a reduction in damages during natural disasters, subsequently lowering the costs for state and federal disaster recovery programs. The retroactive applicability clause, allowing individuals to claim the tax exclusion back to 2020, may further stimulate participation in state-sponsored programs by alleviating past financial burdens associated with property improvements.

Summary

House Bill 4070, titled the 'Disaster Mitigation and Tax Parity Act of 2023', seeks to amend the Internal Revenue Code to exclude amounts received by individuals from state-based catastrophe loss mitigation programs from their gross income. This initiative aims to encourage individuals to undertake improvements to their properties that would mitigate damage from catastrophic events such as windstorms, earthquakes, and wildfires. By making these payments tax-exempt, the bill targets homeowners who may be dissuaded from investing in disaster preparedness due to potential tax implications on these financial aids.

Contention

Despite its potential benefits, the bill may face opposition regarding the implications for state funding and insurance markets. Critics may argue that while tax exclusions could incentivize mitigation, they could also unintentionally drain state revenues or complicate the regulatory framework surrounding insurance and disaster recovery programs. Discussions will likely center around ensuring that these measures do not undermine the financial stability of state governments tasked with managing disaster response and recovery.