Washington, D.C. — Congressman Greg Murphy, M.D., co-introduced the Disaster Mitigation and Tax Parity Act alongside Rep. Doug LaMalfa (R-CA). This bipartisan, bicameral legislation would exclude qualified catastrophe mitigation payments from gross income for federal tax purposes.
"Catastrophe mitigation payments used to improve natural disaster resilience should not be treated as a source of income, and North Carolinians should not be taxed for them," said Congressman Greg Murphy, M.D. "Eastern North Carolina understands how deadly and damaging hurricanes can be, and the costs associated with rebuilding. Adequate preparation for storms is a valuable investment and should be strongly incentivized, not taxed. This bill empowers individuals to protect themselves before disaster strikes, reducing or eliminating entirely, the risk of catastrophic damage to their homes." "Homeowners shouldn’t be hit with unexpected federal taxes just because they received rebates through state and local programs," said Congressman Doug LaMalfa. "Right now, there’s an unfair gap between how federal and state disaster assistance is treated, leaving many homeowners with an added tax burden at the worst possible time. We need to be sure that disaster mitigation efforts actually reduce risks and help people rebuild, rather than having their assistance siphoned away by federal taxes."
"The North Carolina Insurance Underwriting Association (NCIUA) has invested over $100 million through programs such as Strengthen Your Roof grants to help policyholders fortify their homes and build a stronger, storm-ready North Carolina," said Gina Hardy, CEO of the North Carolina Joint Underwriting Association. "Adequate preparation for storms is a valuable investment that should be incentivized, not taxed. However, these resilience grants are currently subject to federal taxation, reducing the funds available for homeowners to strengthen their homes and better protect against catastrophic events. I appreciate Congressman Greg Murphy, M.D.'s leadership in proposing legislation to eliminate these taxes, ensuring that every dollar goes toward making homes more resilient, which in turn protects communities and preserves insurance availability."
Background
North Carolina’s Strengthen Your Roof program provides grants to residents to fortify their roofs from potential wind damage. Over 4,500 households in North Carolina’s Third District have participated in this program.
Unfortunately, the IRS has interpreted these grants as a source of income, forcing thousands of grant recipients to pay taxes on these grants. The bill defines a “qualified catastrophe mitigation payment” as any amount received for making improvements to an individual's property for the sole purpose of reducing the damage that would be done to such property by a windstorm, earthquake, flood, or wildfire. |