S. 336 – Disaster Mitigation and Tax Parity Act of 2025

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Updated November 24, 2025 at 3:11 AM UTC

The Disaster Mitigation and Tax Parity Act of 2025 changes the Internal Revenue Code so that money individuals receive from state‑run catastrophe loss mitigation programs is excluded from their taxable income. It applies to payments used to improve property to protect against windstorms, earthquakes, floods, or wildfires, and it works retroactively for tax years after 2021, letting taxpayers amend prior returns to claim the benefit.

Key Provisions

Adds a new subsection to the tax code that says any payment an individual receives from a state‑run or state‑approved catastrophe loss mitigation program is not counted as taxable income.
Defines a “qualified catastrophe mitigation payment” as money (other than disaster assistance) given to a property owner to make improvements that only aim to reduce damage from windstorms, earthquakes, floods, or wildfires.
Specifies that these payments do not increase the owner’s tax basis in the property, following the same rule that applies to other disaster‑related tax benefits.
Updates related sections of the tax code to reference the new “qualified catastrophe mitigation payments” language.
Makes the exclusion effective for tax years beginning after Dec. 31, 2021 and allows taxpayers to claim the benefit retroactively, including by filing amended returns.

Legislative Activity

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1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance.

Finance Committee

January 30, 2025

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SenateIntro Referral

Introduced in Senate

January 30, 2025

SenateIntro Referral

Read twice and referred to the Committee on Finance.

Finance Committee

January 30, 2025

Bill Text

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Introduced in SenateIssued January 30, 2025

II

119th CONGRESS

1st Session

S. 336

IN THE SENATE OF THE UNITED STATES

January 30, 2025

Mr. Tillis (for himself, Mr. Padilla, Mr. Cassidy, Mr. Schiff, Mr. Kennedy, Mr. Hickenlooper, Mr. Budd, Ms. Klobuchar, Mr. Wicker, Mr. Bennet, and Mr. Merkley) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to exclude from gross income amounts received from State-based catastrophe loss mitigation programs.

1.

Short title

This Act may be cited as the Disaster Mitigation and Tax Parity Act of 2025.

2.

Exclusion of amounts received from State-based catastrophe loss mitigation programs

(a)

In general

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:

(h)

State-Based catastrophe loss mitigation programs

(1)

In general

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—

(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 the purpose of making such payments.

(2)

Qualified catastrophe mitigation payment

For purposes of this section, the term qualified catastrophe mitigation payment means any amount (other than the amount of any qualified disaster mitigation payment) 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, flood, or wildfire.

(3)

No increase in basis

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

.

(b)

Conforming amendments

(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.

(c)

Effective date

(1)

In general

The amendments made by this section shall apply to taxable years beginning after December 31, 2021.

(2)

Retroactive applicability

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.