Us Congress 2023-2024 Regular Session

Us Congress Senate Bill SB5296

Introduced
11/12/24  

Caption

READY Accounts Act

Impact

The implementation of this bill could significantly impact state laws relating to tax deductions for disaster preparedness. By establishing a specific account type dedicated to disaster-related expenses, it encourages individuals to proactively save for emergencies. The potential tax deduction provides a financial incentive for homeowners to contribute to the READY accounts, thereby facilitating better recovery strategies and reducing the financial burdens that typically arise after disasters.

Summary

SB5296, also known as the READY Accounts Act, aims to amend the Internal Revenue Code to establish Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts. These accounts are designed to allow individuals to set aside money for home disaster mitigation and recovery expenses with potential tax benefits. Specifically, individuals can receive a tax deduction of up to $4,500 for contributions made to these accounts. The act seeks to enhance financial preparedness for homeowners facing the uncertainties of natural disasters by expanding the framework for emergency financial planning.

Contention

Notable points of contention revolve around the limitations set for withdrawals and the broad definitions of qualified home disaster mitigation and recovery expenses. Critics may argue that while the tax benefits of the READY accounts are appealing, the restrictions on account usage could hinder access to necessary funds during critical times. Furthermore, the regulation on what constitutes 'qualified expenses' could lead to disputes about allowable usage of the funds, thereby complicating the recovery process for affected homeowners.

Companion Bills

No companion bills found.

Similar Bills

US HB440

READY Accounts ActThis bill establishes a new Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) account, allows individuals to make tax-deductible contributions of up to $4,500 per year to such accounts (adjusted annually for inflation), and allows individuals to take tax-free distributions from such accounts to pay for qualified home disaster mitigation and recovery expenses related to a principal residence owned by the taxpayer.Under the bill, qualified home disaster mitigation expenses include expenses certified by a qualified industry professional as meeting criteria to mitigate damage from a natural or other disaster, includinginstalling a roofing underlayment to sheathing, impact-resistant windows, impact-resistant entry doors, or ground anchors;replacing a roof covering;applying a foam adhesive to reinforce the roof structure;strengthening the connection of the roof deck to roof framing, roof-to-wall connections, soffits, or attic ventilation openings;elevating a residence; orachieving the current building code standard.Qualified home disaster recovery expenses include costs for repairing damage to a residence resulting from fire, storm, or other casualty (provided such costs are not reimbursed).Distributions from a READY account used for anything other than qualified home disaster mitigation and recovery expenses must be included in gross income and are subject to a 20% penalty. (Some exceptions apply.)Finally, the bill imposes a 6% tax on contributions in excess of the annual limit. (Some exceptions apply.) 

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