The Disaster Resiliency and Coverage Act of 2025 aims to increase disaster preparedness and insurance coverage by providing grants for home mitigation, tax exclusions for disaster relief payments, and a tax credit for disaster mitigation expenditures.
Mike Thompson
Representative
CA-4
The Disaster Resiliency and Coverage Act of 2025 aims to increase household disaster resilience through a grant program for pre-disaster mitigation activities, tax exclusions for state-based catastrophe loss mitigation payments and certain emergency agricultural assistance, and a tax credit for disaster mitigation expenditures. The grant program will provide funds to states and tribal governments for mitigation activities on individual homes in high-risk disaster areas, while the tax exclusions and credit offer financial relief and incentives for individuals and agricultural producers affected by disasters. This act seeks to encourage proactive measures to protect homes and businesses from the impact of future disasters.
Disaster Prep Gets a Boost: New Bill Offers Grants and Tax Breaks for Homeowners and Farmers, Starting 2026
The Disaster Resiliency and Coverage Act of 2025 is a multi-pronged approach to dealing with the increasing frequency and severity of natural disasters. It aims to make homes more resilient, help people afford insurance, and provide financial relief to farmers hit by extreme weather. The bill tackles the problem through grants, tax breaks, and tweaks to existing disaster relief programs.
Making Homes Disaster-Ready
This section focuses on helping homeowners before disaster strikes. The bill sets up a grant program, run by the President through FEMA, where states and tribal governments can get money to help residents in high-risk areas make their homes more disaster-proof. (SEC. 2)
- Who's Eligible? The bill targets areas most likely to be hit by major disasters, with eligibility reviewed every five years. Homeowners with adjusted gross incomes over $250,000 won't qualify for these grants. (SEC. 2)
- What's Covered? Think reinforcing roofs, protecting against floods and wind damage, elevating homes, creating fire-resistant zones, and even installing storm shelters. The specifics will be determined by FEMA and the Federal Insurance Office, in consultation with various experts. (SEC. 2)
- How Much? States can provide up to $10,000 per household, adjusted annually for inflation. (SEC. 2)
- Real-World Example: Imagine a family in a hurricane-prone area of Florida. This grant could help them install hurricane shutters and reinforce their roof, potentially saving them thousands in future repairs and possibly lowering their insurance premiums.
Tax Breaks for Disaster Mitigation
This part of the bill offers financial incentives for both homeowners and businesses to invest in disaster preparedness.
- Tax Credit: The bill creates a tax credit equal to 30% of what you spend on approved disaster mitigation. (SEC. 5)
- Example: If a small business owner spends $5,000 on flood-proofing their shop, they could get a $1,500 tax credit.
- State Payments: If a state already has a program that helps with mitigation costs, the state is considered to have paid that portion. The federal credit adjusts accordingly, preventing double-dipping. (SEC. 5)
- Timber Exception: There are specific rules for timber-related expenses, ensuring the credit isn't used for standard business practices. (SEC. 5)
Helping Farmers Weather the Storm
This section expands the types of agricultural disaster assistance that are excluded from gross income, providing more financial relief to farmers.
- Expanded Exclusions: The bill clarifies that payments from several existing programs, including the Wildfires and Hurricanes Indemnity Program Plus and the Quality Loss Assistance Program, are not considered taxable income. (SEC. 4)
- Example: A farmer who receives a payment from the Wildfires and Hurricanes Indemnity Program Plus after losing crops to a wildfire won't have to pay federal income tax on that payment.
Putting It All Together: Challenges and Opportunities
While the bill aims to make a real difference, there are some practical considerations:
- Complexity: The tax credit calculations, especially with state contributions, could be confusing for some taxpayers. (SEC. 5)
- Eligibility Limits: The $250,000 income cap for homeowner grants means some people in high-risk, high-cost areas might not get the help they need. (SEC. 2)
- Coordination: The bill relies on effective collaboration between federal agencies, state governments, and the insurance industry, which can be a challenge.
- Long-Term Impact: It's important to note that this program is focused on mitigation—reducing the damage from future disasters. It doesn't directly address immediate relief needs after a disaster strikes.
The Disaster Resiliency and Coverage Act of 2025 represents a significant step toward proactive disaster preparedness. By combining grants, tax incentives, and expanded income exclusions, it aims to make individuals, communities, and agricultural businesses more resilient in the face of increasingly severe natural disasters. However, the bill's success will depend on how effectively it's implemented and whether it reaches those who need it most.