Flood Insurance Tax Credit Act of 2025

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25F the following new section:

There shall be allowed as a credit against the tax imposed by this subtitle for a taxpayer for a taxable year an amount equal to the sum of—

(1) the lesser of—

(A) the Federal flood insurance expenses of the taxpayer for the taxable year, and

(B) $1,500, plus

(2) the lesser of—

(A) 50 percent of the private flood insurance expenses of the taxpayer for the taxable year, and

(B) $3,000, plus

(3) the lesser of—

(A) Federal contents coverage flood insurance expenses of the taxpayer for the taxable year, and

(B) $600.

The amount determined under subsection (a)(1) for a taxpayer for a taxable year shall be reduced (but not below zero) by—

(A) in the case of a joint return, 1.5 percent of so much of the taxpayer’s income for such taxable year as exceeds $100,000, and

(B) in any other case, 3 percent of so much of the taxpayer’s income for such taxable year as exceeds $50,000.

The amount determined under subsection (a)(2) for a taxpayer for a taxable year shall be reduced (but not below zero) by—

(A) in the case of a joint return, 3 percent of so much of the taxpayer’s income for such taxable year as exceeds $100,000, and

(B) in any other case, 6 percent of so much of the taxpayer’s income for such taxable year as exceeds $50,000.

The amount determined under subsection (a)(3) for a taxpayer for a taxable year shall be reduced (but not below zero) by—

(A) in the case of a joint return, 0.6 percent of so much of the taxpayer’s income for such taxable year as exceeds $100,000, and

(B) in any other case, 1.2 percent of so much of the taxpayer’s income for such taxable year as exceeds $50,000.

For purposes of this section:

The term Federal flood insurance expense means the excess of—

(A) amounts paid or incurred as premiums for flood insurance coverage made available under the National Flood Insurance Act of 1968, over

(B) Federal contents coverage flood insurance expense.

The term private flood insurance expense means amounts paid or incurred as premiums for flood insurance coverage other than flood insurance coverage made available under the National Flood Insurance Act of 1968, including such coverage for the contents of a structure.

The term Federal contents coverage flood insurance expense means amounts paid or incurred as premiums for flood insurance coverage made available under the National Flood Insurance Act of 1968 for contents of a structure.

Federal flood insurance expenses, private flood insurance expenses, and Federal contents coverage flood insurance expenses shall only be taken into account to the extent that such expenses are paid or incurred for coverage related to the taxpayer’s principal residence (as such term is used in section 121).

No credit shall be allowed under subsection (a) for any amount with respect to which a deduction is allowed due to subsection (c) or (e) of section 280A.

In the case of any taxable year beginning in calendar years after 2026, each of the dollar amounts in subsections (a) and (b) shall be increased by an amount equal to—

(1) such dollar amount, multiplied by

(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2025 for 2016 in subparagraph (A)(ii) thereof.

If any amount after adjustment under the preceding sentence is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25F the following new item:

The amendments made by this section shall apply to taxable years beginning after December 31, 2025.