WASHINGTON, D.C. – Senators Thom Tillis (R-NC), Alex Padilla (D-CA), Bill Cassidy (R-LA), and Adam Schiff (D-CA) introduced the Disaster Mitigation and Tax Parity Act of 2025, legislation that excludes from gross income, for income tax purposes, any qualified catastrophe mitigation payment made under a state-based catastrophe loss mitigation program. 

“This commonsense legislation takes a critical step toward empowering individuals and communities to better protect themselves from the devastating effects of natural disasters like Hurricane Helene,” said Senator Tillis. “By excluding qualified catastrophe mitigation payments from income tax, we are incentivizing property owners to make the necessary improvements that reduce damage and save lives. This proactive approach to disaster preparedness not only helps families rebuild faster but strengthens our resilience in the face of future disasters.”

“The devastating fires in Southern California underscored the urgent need to empower homeowners to take proactive steps to keep their families and homes safe,” said Senator Padilla. “As these disasters become more frequent and more extreme due to the climate crisis, we should incentivize — not penalize — taxpayers for protecting their homes. That’s why the Disaster Mitigation and Tax Parity Act would provide a tax exemption on payments from state-based programs for homeowner investments in critical disaster-related improvements.”

“Louisianans understand the impact of devastating storms, but with the help of state and local programs, we have tools to rebuild and return to wholeness,” said Dr. Cassidy. “If communities need tax relief, let’s give it to them!”

“We have seen how natural disasters have devastated communities around the country, and we must ensure we have the resources and programs in place to respond,” said Senator Schiff. “Homeowners should not face additional taxes for wanting to protect their homes and our bipartisan legislation will provide the needed tax relief to help affected Americans recover from these disasters.”

Background:

The bill defines a “qualified catastrophe mitigation payment” as any amount received for making improvements to an individual's property for the sole purpose of reducing the damage that would be done to such property by a windstorm, earthquake, flood, or wildfire.

The Disaster Mitigation and Tax Parity Act of 2025 is co-sponsored by Senators John Hickenlooper (D-CO), Michael Bennett (D-CO), Jeff Merkley (D-OR), Amy Klobuchar (D-MN), John Kennedy (R-LA), Roger Wicker (R-MS), and Ted Budd (R-NC).

The Disaster Mitigation and Tax Parity Act of 2025 is endorsed by North Carolina Insurance Commissioner Mike Causey and the North Carolina Insurance Association.

“Passing federal legislation that would ensure all state-funded, pre-disaster mitigation grants are tax-free would allow these grants to have the maximum impact,” said Mike Causey, Insurance Commissioner, State of North Carolina. “These mitigation grants protect homes and have a direct impact on insurers and the claims they pay for such disasters, which is critical for ensuring an insurance market that is stable and available and affordable for homeowners.  Because North Carolina has been a leader in windstorm mitigation through our Strengthen Your Roof and Strengthen Your Coastal Roof grant programs, and because working to maintain a healthy market is one of my goals as Insurance Commissioner, I am in total support of this bill. I thank Senator Tillis for proposing it.” 

“North Carolina Insurance Association (NCIUA) has made grants of more than $100 million so that our policyholders can invest in resilient construction and fortified roofs,” said Gina Hardy, CEO, North Carolina Insurance Association. “Given the possibility of more frequent catastrophic events, we believe all of the grant money we invest should be free of federal taxation and remain with our policyholders so they can continue to strengthen and improve their homes.” 

Full text of the bill is available HERE.

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