July 23, 2021 - Washington - Senators Dianne Feinstein (D-Calif.), Richard Burr (R-N.C.), Alex Padilla (D-Calif.) and Thom Tillis (R-N.C.) and Representative Mike Thompson (D-Calif.) on Thursday introduced the bipartisan, bicameral Disaster Mitigation and Tax Parity Act, a bill that would make rebates that homeowners receive for making natural disaster mitigation improvements to their homes exempt from federal taxes.

California and North Carolina are among the states that provide rebates to homeowners who take steps to protect their homes from natural disasters. These improvements can include removing trees, bushes and other fire-prone vegetation close to homes that contribute to wildfires, strengthening foundations to protect against earthquakes and installing fortified roofs to withstand hurricanes.

However, homeowners are required to pay federal taxes on those rebates. In contrast, rebates for energy conservation improvements are already exempt from federal income taxes. This bill would place natural disaster mitigation efforts in a similar category.

“Climate change is increasing the frequency and destructiveness of natural disasters like wildfires and hurricanes. Others, like earthquakes, occur unexpectedly and can cause massive damage,” said Senator Feinstein. “A growing number of states offer rebates for home improvements that mitigate such damage, but those rebates are currently subject to federal income taxes, putting the cost further out of reach for many homeowners. Exempting these rebates from federal taxes would help more people afford the improvements necessary to guard their homes and protect their families from natural disasters. It would also reduce costs incurred in responding and rebuilding from disasters.”

“North Carolina’s mitigation grant program provides significant resources to the state’s coastal communities by protecting homes from the devastating impacts of hurricanes and tropical storms,” said Senator Burr. “This legislation will ensure that these grants, which are proven to reduce damage, receive the same federal tax treatment as mitigation grants made by the Federal Emergency Management Agency. I’m proud to work with Senator Feinstein on this important legislation, which will save taxpayer dollars and protect families in the long-run.”

“With the growing threat of climate change leading to more frequent and severe natural disasters, it is important that homeowners take proactive steps to protect their homes from future disasters,” said Senator Padilla. “California is already leading on this issue by offering rebates for disaster-related improvements, including for earthquakes and wildfires, but those rebates are subject to federal income taxes. We should incentivize, not penalize these improvements by offering an exemption for these investments.”

“North Carolinians who receive disaster mitigation payments, like many did after Hurricanes Matthew, Florence and Dorian, receive the payments because they need the financial help to build back their homes and communities after a natural disaster,” said Senator Tillis. “They shouldn’t have to worry about surprise tax liabilities and I am proud to work with my colleagues on both sides of the aisle to provide relief for many North Carolinians who need it.”

“The federal government must do everything possible to help people prepare for and mitigate against disasters,” said Representative Thompson. “The Disaster Mitigation and Tax Parity Act provides an important tax incentive for homeowners to help make their homes more resilient against natural disasters like earthquakes and wildfires. Encouraging this type of investment on the front end will help keep our communities safer and save the taxpayers money in long run. I’ll work to ensure this important legislation becomes law.”

In the House, the bill is cosponsored by Pete Aguilar (D-Calif.), Ami Bera (D-Calif.), Ken Calvert (R-Calif.), Judy Chu (D-Calif.), John Garamendi (D-Calif.), Jimmy Panetta (D-Calif.), Tom Rice (R-S.C.), David Rouzer (R-N.C.), Linda Sánchez (D-Calif.), Terri Sewell (D-Ala.) and Jackie Speier (D-Calif.).
Source: Senator Dianne Feinstein