Disaster Resiliency and Coverage Act of 2025
- Sponsor
- Rep. Thompson, Mike [D-CA-4]
- Committees
- Transportation and Infrastructure Committee (primary)
- Last action
- Feb 6, 2025
Bottom line
This bill aims to reduce the financial and physical impact of natural disasters on homeowners and farmers by incentivizing and funding pre-disaster mitigation efforts and providing tax relief for related expenses and agricultural losses.
What it actually does
This bill establishes a federal grant program for states and tribal governments to fund individual household pre-disaster mitigation activities, such as roof strengthening, flood protection, and wildfire-resistant features. It also creates a new federal tax credit for these mitigation expenditures and excludes both federal grant amounts and state-based mitigation payments from gross income, alongside certain emergency agricultural assistance.
Proponents argue
Supporters argue this bill proactively addresses the escalating costs and devastation of natural disasters by shifting focus from post-disaster relief to pre-disaster preparedness. By making mitigation activities more accessible and affordable through grants and tax credits, it protects homes, saves lives, and reduces the long-term financial burden on federal, state, and individual resources, while also encouraging a more robust and affordable private insurance market.
Opponents contend
Critics might argue that while mitigation is important, this program could create a new federal bureaucracy, potentially duplicate existing state or local efforts, or disproportionately benefit higher-income households despite the AGI limits, as lower-income families might still struggle with upfront costs or navigating complex application processes. Concerns could also be raised about the federal government's role in incentivizing private insurance market behavior.
The bill is moderately complex due to its multiple amendments to existing law and detailed definitions, requiring a careful read to understand its full scope.
Section 2(a), adding Section 207 to the Robert T. Stafford Disaster Relief and Emergency Assistance Act.
Establishment of Individual Household Disaster Mitigation Program
This provision mandates the President to create a grant program for States and Indian tribal governments. These grants are specifically for funding pre-disaster mitigation activities in individual residential households that are at high risk of damage from major disasters. The program aims to reduce vulnerability before a disaster strikes.
Supporters argue
Supporters argue this program is crucial for proactive disaster preparedness, reducing future damage and recovery costs. It empowers local governments to tailor mitigation efforts to their specific risks and helps homeowners protect their properties.
Critics contend
Some might argue that this program adds another layer of federal bureaucracy to disaster management, potentially overlapping with existing state or local initiatives, or that the $10,000 cap might be insufficient for comprehensive mitigation in some high-risk areas.
Tradeoffs
The tension lies between federal oversight and local flexibility in administering funds, and balancing the need for broad accessibility with the administrative burden of means-testing and activity eligibility.
Section 2(a), adding Section 207(b), (c), (e), (f), (g), (h) to the Stafford Act.
Program Eligibility, Standards, and Financial Limits
This section details how the mitigation grant program will operate. It requires the President to establish eligible disaster areas and states/tribes to submit plans outlining their risk areas, insurance market assessments, eligible mitigation activities, and applicant criteria (including household income). It limits grants to high-risk areas and individuals with adjusted gross income below $250,000 ($500,000 for joint filers). The President must also establish multi-tiered mitigation standards, and states/tribes must provide guidance on insurance incentives.
Section 2(a), adding Section 207(i) to the Stafford Act.
Scope of Eligible Mitigation Activities
This provision provides an extensive list of activities that qualify for grant funding under the program. These include improvements to roof strength, water barriers, fire resistance, seismic bracing, flood elevation, installation of storm shelters, standby generators, and wildfire preparedness measures like vegetation removal and ignition-resistant construction. It also includes activities leading to "FORTIFIED" or "Wildfire Prepared Homes" designations.
Section 2(a), adding Section 207(j) to the Stafford Act.
Creation of Hazard Mitigation Advisory Committee
This provision establishes a 50-member advisory committee to guide the President on emerging hazard mitigation research and recommend additions to the list of qualifying activities. The committee will include representatives from state insurance commissioners, private insurance companies, consumer advocates, emergency responders, academics, building code associations, and environmental organizations, ensuring a broad range of expertise.
Section 2(b) and Section 3, amending Section 139 of the Internal Revenue Code of 1986.
Tax Exemption for Mitigation Grants and State Payments
This provision amends the Internal Revenue Code to ensure that financial assistance received by individuals under the new federal Individual Household Disaster Mitigation Program is not counted as gross income for tax purposes. Additionally, it extends this tax exclusion to "qualified catastrophe loss mitigation payments" received from state-based programs for hazard mitigation improvements to a residence, effective for taxable years beginning after December 31, 2025.
Section 4, amending Section 139 of the Internal Revenue Code of 1986.
Tax Exemption for Specific Agricultural Disaster Relief
This section expands the definition of "qualified disaster relief payment" in the Internal Revenue Code to include assistance received under several existing emergency agricultural programs, such as the Wildfires and Hurricanes Indemnity Program Plus, the Agricultural Act of 2014, and Noninsured Crop Assistance. This means that payments from these programs will also be excluded from gross income for tax purposes, effective for taxable years beginning after December 31, 2025.
Section 5, adding new Section 28 to the Internal Revenue Code of 1986.
Federal Tax Credit for Disaster Mitigation Expenditures
This provision establishes a new federal tax credit equal to 30% of the expenditures paid or incurred by a taxpayer for qualifying disaster mitigation activities on their real property. The "qualifying mitigation activities" are those defined in the new Stafford Act program. The credit is reduced if a state also contributes to the expenditure, and rules prevent double benefits (e.g., basis reduction, denial of other deductions/credits for the same expenditure).
An individual is not eligible for a grant if their adjusted gross income (AGI) exceeds $250,000 ($500,000 for joint returns) for the taxable year immediately preceding the grant application.
Section 2(a), adding Section 207(e)(2) to the Stafford Act.
Why it matters:This is standard legislative practice for defining eligibility criteria within a program's operational details.
Case for: Proponents argue this ensures the program's limited funds are directed towards households that genuinely need financial assistance to undertake mitigation, rather than subsidizing wealthier individuals who could afford it independently.
Case against: Critics might argue that this AGI limit could exclude many middle-income families who, while not low-income, still face significant financial barriers to expensive mitigation activities and are at high risk. This could limit the overall effectiveness of the program in building widespread resilience.
Estimated impact: This provision significantly narrows the pool of eligible homeowners for direct grant assistance, potentially impacting millions of households depending on their income levels and location in high-risk areas.
Explicitly states that nothing in the Act shall preempt state regulation of the business of insurance or require any insurance provider to alter underwriting, pricing, and distribution of insurance. It also clarifies that states are not required to collect new insurance data for their plan assessment.
Section 2(a), adding Section 207(k) to the Stafford Act.
Why it matters:This is standard legislative practice to address potential federalism concerns and clarify the scope of federal intervention, often included to garner support from states and the insurance industry.
Case for: Proponents argue this provision is essential to respect state sovereignty over insurance regulation and avoid federal overreach. It reassures the insurance industry that the program is not a back-door attempt to dictate their business practices, encouraging their cooperation.
Case against: Critics might argue that by explicitly limiting federal influence over insurance pricing and underwriting, the bill misses an opportunity to directly mandate insurance incentives for mitigation, potentially weakening the program's ability to drive down insurance costs or increase availability.
Estimated impact: This provision ensures the existing regulatory framework for insurance remains intact, preventing potential conflicts between federal disaster mitigation efforts and state insurance markets.
The amount of any deduction or other credit allowable under the Internal Revenue Code for any expenditure for which a disaster mitigation credit is allowed shall be reduced by the amount of the mitigation credit.
Section 5(a), adding Section 28(e)(3) to the Internal Revenue Code.
Why it matters:This is standard legislative practice in tax law to prevent taxpayers from receiving multiple federal tax benefits for the same expenditure, ensuring fiscal responsibility.
Case for: Proponents argue this prevents "double-dipping" and ensures that federal tax incentives are applied consistently and fairly, maximizing the impact of each dollar spent on mitigation.
Case against: No specific opposition is typically raised against anti-double-counting provisions in tax law, as they are considered standard practice for fiscal integrity.
Estimated impact: Prevents an unknown but potentially significant loss of federal tax revenue by ensuring only one tax benefit is claimed per mitigation expenditure.