Flood Insurance Tax Credit Act of 2025
- Bill Number
- H.R. 5504
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-09-18: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-11-20T17:56:52Z
AI-Generated Summary
Flood Insurance Tax Credit Act of 2025 (H.R. 5504)
Purpose This legislation amends the Internal Revenue Code of 1986 to create a new nonrefundable tax credit for certain flood insurance premiums paid by individuals for their primary residence.
Key Provisions
- Credit Amounts: Taxpayers may claim the lesser of actual federal flood insurance premiums or $1,500; the lesser of 50 percent of private flood insurance premiums or $3,000; and the lesser of federal contents coverage premiums or $600.
- Income Phaseouts: The credit reduces based on adjusted gross income, with thresholds starting at $50,000 for single filers and $100,000 for joint filers; reduction rates vary by credit component (1.5–6 percent).
- Eligibility Limits: Expenses qualify only for coverage of the taxpayer’s principal residence under section 121 rules; no credit is allowed for amounts already deducted under section 280A.
- Inflation Adjustment: Dollar limits and phaseout thresholds increase annually after 2026 using the cost-of-living adjustment under section 1(f)(3), rounded to the nearest $50.
- Effective Date: The credit applies to taxable years beginning after December 31, 2025.
Significant Changes to Existing Law The bill adds new section 25G to subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code and updates the corresponding table of sections. No prior tax credit existed specifically for flood insurance expenses.
Potential Impacts
- Citizens: Reduces the net cost of flood insurance for qualifying homeowners, potentially increasing coverage rates in flood-prone areas.
- Government Agencies: The IRS would administer the credit through tax filings; the National Flood Insurance Program may see indirect effects from higher participation.
- International Relations: No direct effects identified.
Main Stakeholders Affected
- Individual taxpayers who purchase flood insurance for their primary residence.
- Private flood insurance providers and the federal National Flood Insurance Program.
- The Internal Revenue Service for implementation and enforcement.
Notable Legal, Constitutional, or Political Implications The measure exercises Congress’s authority to provide tax credits under the Internal Revenue Code. It creates a new federal subsidy mechanism tied to insurance purchases, which may influence future budget and disaster preparedness policy without altering constitutional structures.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Velázquez, Nydia M. [D-NY-7]
Recent Actions
- 2025-09-18: Referred to the House Committee on Ways and Means.
- 2025-09-18: Introduced in House
- 2025-09-18: Introduced in House
Bill Versions
- Flood Insurance Tax Credit Act of 2025 — issued 2025-09-18 — PDF (6 pages)