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STATE OF OKLAHOMA
1st Session of the 60th Legislature (2025)
HOUSE BILL 1834 By: Hefner
AS INTRODUCED
An Act relating to revenue and taxation; creating the
Inhofe Disaster Savings Account Act; providing
definitions; providing for income ta x deduction when
contributing to disaster savings account; providing
exemption for interest income earned; providing
limitations for contributions to disaster savings
account; providing requirement for withdrawal in
certain amounts; providing limitations o n
distributions made; providing for certain increase in
tax paid attributable to a taxable distribution;
providing for who receives the account upon death;
requiring Oklahoma Tax Commission to promulgate rules
and provide notice; providing for codification ; and
providing an effective date .
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2387 of Title 68, unless there
is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Inhofe Disaster
Savings Account Act".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2388 of Title 68, unless there
is created a duplication in numbering, reads as follows:
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As used in the Inhofe Disaster Saving s Account Act:
1. "Disaster Savings Account " means a regular savings account
or money market account established by an insurance policyho lder for
residential property in this state to cover an insurance deductible
under an insurance policy for the taxpayer 's legal residence that
covers hurricanes, rising floodwaters, tornado es, hail, or other
catastrophic windstorm event damage , or by an individual to cover
self-insured losses for the taxpayer 's legal residence from
hurricanes, rising floodwaters, tornado es, hail, or other
catastrophic windstorm event. The account may also cover costs
incurred in proactively protecting the taxpayer 's legal residence
from hurricanes, rising floodwaters, tornado es, hail, or other
catastrophic windstorm event damage. The account must be labeled as
a Disaster Savings Account to qualify as a Disaster Savings Account
as defined in this paragraph. A taxpayer shall establish only one
Disaster Savings Account and shall specify that the purpose of the
account is to cover the amount of insurance deductible and other
uninsured portions of risks of loss from hurricane s, rising
floodwaters, tornado es, hail, or other catastrophic windstorm event
and costs incurred in proactively protecting the taxp ayer's legal
residence from hurricanes, rising floodwaters, tornado es, hail, or
other catastrophic windstorm event damage ;
2. "Qualified disaster expenses " means expenses paid o r
incurred by reason of a major disaster that has been declared by the
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President of the United States or the Governor of the State of
Oklahoma to be an emergency by executive order; and
3. "Qualified deductible " means the deductible for the
individual's homeowner's policy for a taxpayer 's legal residence.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2389 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. For taxable years beginning on or after January 1, 2026, a n
individual is allowed a deduction from Oklahoma taxable income for
amounts contributed to a Disaster Savings Account in accordance with
subsection C of this section. All interest income earned by the
Disaster Savings Account is exempt from the tax imposed pursuant to
Section 2355 of Title 68 of the Oklahoma Statutes .
B. A Disaster Savings Account is not subject to attachment,
levy, garnishment, or legal process in this state.
C. The total amount that may be contributed to a Disaster
Savings Account must not exceed:
1. In the case of an individual whose qualified deductible is
less than or equal to One Thousand Dollars ($1,000.00), Two Thousand
Dollars ($2,000.00);
2. In the case of an indivi dual whose qualified deductible is
greater than One Thousand Dollars ($1,000.00), the amount equal to
the lesser of Fifteen Thousand Dollars ($15,000.00) or twice the
amount of the taxpayer 's qualified deductible; and
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3. In the case of a self -insured individual who chooses not to
obtain insurance on his or her legal residence, Two Hundred Fifty
Thousand Dollars ($250,000.00), but shall not exceed the value of
the individual taxpayer 's legal residence.
If a taxpayer contributes in excess of the limits as pr ovided
for in this subsection, the taxpayer shall withdraw the amount of
excess contributions from the individual 's Disaster Savings Account.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 2390 of Title 68, unless there
is created a duplication in numbering, reads as follows:
A. A distribution from a Disaster Saving s Account must be
included in the income of the taxpayer unless the amount of the
distribution is used to cover qualified disa ster expenses. No
amount is included in income if the qualified disaster expe nses of
the taxpayer during the taxable year are equal to or greater than
the aggregate distributions during the taxable year. If aggregate
distributions exceed the qualified di saster expenses during the
taxable year, the amount otherwise included in income must be
reduced by the amount of the distributions for qualified disaster
expenses.
B. The tax paid pursuant to Section 2355 of Title 68 of the
Oklahoma Statutes attributable to a taxable distribution must be
increased by two and one -half percent (2.5%) of the amount which is
includable in income. This additional tax does not apply if the:
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1. Taxpayer no longer owns a legal residence; or
2. Distribution is from an account c onforming with Section 3 of
this act and is made on or after the date on which the taxpayer
attains the age of seventy (70).
C. If a taxpayer receives a nontaxable distribution under this
section, the taxpayer must not make further contributions to any
Disaster Savings Account.
D. If a taxpayer who owns a Disaster Savings Account d ies, his
or her account shall be included in the income of the person who
receives the account, unless that person is the surviving spouse of
the taxpayer. Upon death of the sur viving spouse, the account is
included in the income of the person who receives the account. The
additional tax in subsection B of this section does not apply to
distribution on death of the taxpayer or the surviving spouse.
E. The Oklahoma Tax Commissio n shall promulgate rules necessary
to implement and administer this act. The Oklahoma Tax Commission
shall provide written notice to the Oklahoma Insurance Department
upon the promulgation of any rules or changes to rules related to
this act.
SECTION 5. This act shall become effective November 1, 2025.
60-1-10175 AO 01/07/25