This bill matters because it aims to help Americans better prepare for and recover from natural disasters, which are becoming more frequent and severe. By offering a tax incentive, it encourages homeowners to invest in protective measures for their homes, potentially reducing future damage and financial strain. If this bill becomes law, homeowners would have a dedicated, tax-advantaged way to save for these critical expenses, potentially reducing their reliance on emergency aid or taking on debt after a disaster. If it doesn't pass, homeowners would continue to bear the full, often unexpected, financial burden of disaster preparedness and recovery without this specific tax benefit.
KEY PROVISIONS
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PROVISION 01
Establishes Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts as a new type of tax-advantaged savings account.
This creates a new financial tool specifically designed to help homeowners prepare for and recover from natural disasters.
PROVISION 02
Allows individuals to deduct contributions made to a READY account from their taxable income each year.
The tax deduction provides a financial incentive for individuals to save money for home disaster mitigation and recovery.
PROVISION 03
Caps the annual tax-deductible contribution at $4,500, with this limit subject to inflation adjustments starting after 2026.
This sets the maximum amount an individual can contribute and receive a tax benefit for each year, while also planning for future economic changes.
PROVISION 04
Defines 'qualified home disaster mitigation and recovery expenses' to include measures like strengthening roofs or windows, elevating homes, and costs for uninsured repairs from disasters.
This ensures the funds saved in READY accounts are used for their intended purpose: protecting and repairing homes from natural calamities.
This bill matters because it aims to help Americans better prepare for and recover from natural disasters, which are becoming more frequent and severe. By offering a tax incentive, it encourages homeowners to invest in protective measures for their homes, potentially reducing future damage and financial strain. If this bill becomes law, homeowners would have a dedicated, tax-advantaged way to save for these critical expenses, potentially reducing their reliance on emergency aid or taking on debt after a disaster. If it doesn't pass, homeowners would continue to bear the full, often unexpected, financial burden of disaster preparedness and recovery without this specific tax benefit.
KEY PROVISIONS
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high
Establishes Residential Emergency Asset-accumulation Deferred Taxation Yield (READY) accounts as a new type of tax-advantaged savings account.
This creates a new financial tool specifically designed to help homeowners prepare for and recover from natural disasters.
high
Allows individuals to deduct contributions made to a READY account from their taxable income each year.
The tax deduction provides a financial incentive for individuals to save money for home disaster mitigation and recovery.
med
Caps the annual tax-deductible contribution at $4,500, with this limit subject to inflation adjustments starting after 2026.
This sets the maximum amount an individual can contribute and receive a tax benefit for each year, while also planning for future economic changes.
high
Defines 'qualified home disaster mitigation and recovery expenses' to include measures like strengthening roofs or windows, elevating homes, and costs for uninsured repairs from disasters.
This ensures the funds saved in READY accounts are used for their intended purpose: protecting and repairing homes from natural calamities.
Loss of tax-exempt status for the account, meaning its assets would become immediately taxable to the beneficiary.
The READY account and its beneficiary
tax
Income from certain business activities within the account would be subject to taxation under section 511.
The READY account
GLOSSARY
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Internal Revenue Code of 1986
The main body of federal tax law in the United States.
Deduction
An amount that can be subtracted from a person's gross income before calculating their taxable income, reducing the amount of tax owed.
Taxable Year
The annual period used for calculating income tax, typically a calendar year for individuals.
Qualified Home Disaster Mitigation Measures
Actions taken to reduce the severity or impact of damage to a home from natural disasters, such as strengthening a roof or installing impact-resistant windows.
Qualified Disaster Recovery Costs
Expenses incurred to repair damage to a home resulting from a fire, storm, or other casualty, specifically those costs not covered by insurance or other compensation.
Account Beneficiary
The individual for whom a READY account is established and who benefits from its funds.
Nonforfeitable
Means that the owner's interest in the account balance cannot be taken away or lost.
ACTION TIMELINE
2 EVENTS
JUN 4, 25
Introduced in Senate
INTROREFERRAL
JUN 4, 25
Read twice and referred to the Committee on Finance.
