Disaster Mitigation and Tax Parity Act of 2025

Section 139 of the Internal Revenue Code of 1986 is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

Gross income shall not include any amount received by or paid for the benefit of an individual as a qualified catastrophe mitigation payment under a program established by— for the purpose of making such payments.

(A) a State or any political subdivision or public instrumentality thereof,

(B) a joint powers authority, or

(C) an entity created by State law to ensure the availability of an adequate market of last resort for essential property insurance or basic property insurance, over which a State agency or State department of insurance has regulatory oversight,

For purposes of this section, the term qualified catastrophe mitigation payment means any amount which is received by or paid for the benefit of the owner of any property to make improvements to such property for the sole purpose of reducing the damage that would be done to such property by a windstorm, earthquake, or wildfire.

Rules similar to the rules of subsection (g)(3) shall apply in the case of this subsection.

(1) Section 139(d) of the Internal Revenue Code of 1986 is amended by striking and qualified and inserting, qualified catastrophe mitigation payments, and qualified.

(2) Section 139(i) of such Code (as redesignated by subsection (a)) is amended by striking or qualified and inserting, qualified catastrophe mitigation payment, or qualified.

The amendments made by this section shall apply to taxable years beginning after December 31, 2020.

The Secretary of the Treasury, or the Secretary’s delegate, shall provide an opportunity for individuals to claim the exclusion from gross income under section 139(h) of the Internal Revenue Code of 1986, as added by this section, including by amended return.